The Politics of Global Production: Apple Company - Case Study Example

Topic: Global Network Production Name: Instructor: Date: The Global production Network Baldwin and Lopez‐Gonzalez (2015, p. 50) claim that the global production network entails two important parts, which will be illustratedseparately before they are merged to create a general meaning. First, there is the need to study deeply and comprehend the globalization part of it. The evolution of business activities in the world has brought up the urge for various enterprises to work closely as they share various ideas. They mainly indulge in such kind of coordination to increase their profit margins, as they build healthy organizational relationships. Due to increased rate of technological revolution, the world has become just a global village, courtesy of fast and safe transportation system alongside communication (Seabrooke and Wigan, 2014, p. 21). In comprehensive terms, the global production network is a word that has been illustrated in quite different of ways, contingent to the context in question. Various international organizations give the meaning of GPN with regard to the main goals and objectives of their enterprise. This paper, however, draws the understanding of GPN from deeper sources to aid in getting a clear comprehension of the subject. Global Production Network is the transformation of business operations by acquiring unique techniques of meeting the consumer standards with the help of technology and ensuring that quality is spread out to all the corners of the international market. It does not just end at the distribution of the products internationally, but it takes care of the consumption of the product (Bergvall-Kåreborn and Howcroft, 2013, p. 19). Technology comes in when handling the methods by which quality is met and how the customers are communicated to. Apple company is one of the international companies that is performing excellently well in meeting the standards and taste of their clients (Chan, Pun, and Selden 2013, p .33). They do so by ensuring that they carry out some thorough research on the specifications of their long-term buyers. It has come up with very captivating iPhones, smart phones that have kept them at the top of the game as compared to other giant organizations like Sony and Samsung. From statistical analysis of Apple Inc, it is possible to demonstrate the way successful companies employ the systematic use of GNP, to create and widen the size of their market. Apple, being in existence in the market for quite a long time, it is an exclusive example, so that readers understand the way it reacts to the technological changes and the market pattern (Chan, Pun, and Selden, 2013, p. 17). Apple Inc is fond of outsourcing its products to countries such as Asia, where there are good marketing strategies. To maintain the profit margin and to remain the best-selling software company, Apple uses many technical and unique methods to impress and acquire more consumers. They employ the most recent technologies to fit the taste and preferences of their potential consumers. There are a number of well-organized stages employed in the production process in Apple to ensure the production of the products and services are kept at high standards (Rioux, Ares, and Huang, 2015, p.37). with its quality and skilled workers, the firm is capable of keeping their standards rising day-by-day. This process is discussed under the topic of labor and human rights as manifested by Apple’s annual report, which is then followed by an analysis of worker education and development. By the end of the reading, it is important that the production and labor type is understood, and hence, the reason Apple is able to consistently produce high-quality products. Apple Company, however, went under manacles of failure in the 90’s. It, however, changed its marketing and designing strategies, which made it emerge as one of the greatest and well-performing enterprises in the world, with a profit margin of $20 billion in 2012 (Rioux, Ares, and Huang, 2015, p. 48). The workers are taken through various orientations according to the departments in, which they will be working. They are given time limits to ensure that they are able to work and get things done as fast as possible to cope with the high level of competition in the software industry (Rioux, Ares, and Huang, 2015, p. 20). Apple also takes the initiative to protect the rights of workers who come from their home countries to help them achieve their success by offering good service to the company. Unlike other Pegatron factories, Apple requires its workers to voluntarily do the overtime service for, which they are later compensated. This makes the workers feel respected and in return, they provide their best to the company. In addition, Apple Inc. does not entertain the employment of underage workers. Amazingly, the companies pay Apple to advertise its products, so they make profits from it anyway (Seabrooke, and Wigan, 2014, p.71). Most of these companies are the network operators who say they sell Apple products. When the network operators want to inform the global market that they deal in and sell Apple products, besides paying the bill to Apple Inc., they pay huge amounts for the branding charges. This is one of the major strategies used by the company to remain at the top of their competitors in the software market. Reporting on the distribution of value at each stage of the production network, this paper captures how various nations, which are the strongholds of Apple Inc. share and enjoy various values of the company. According to the studies carried out in 2013 about the spread of value of the Apple’s smartphone and iPhone. IPhone and the iPhone are the primary money creators for Apple Company; this has made so many organizations wanting to enter into the deals of taking part in the supply chain, but their profits are still much lower compared to the amount made by the Apple. China, for example, plays a major role in the supply chain for these successful products, but its profit margin is quite small as compared to the USA, Japan, and Taiwan and also Korea (Rioux, Ares, and Huang, 2015, p. 9). In the case of iPad, apple keeps the high amount of profit, which is estimated at 30 percent of the sales price. It is also reported that this amount could go up if the sales were made directly through Apple’s retail outlets. Even with the stiff competition in the electronics market, Apple has recorded an estimated 58% of the total sales. This is far much more than the amount of profit made by their competitors and also other industries in the same supply chain. This amount was gathered from the sales of the iPhone4; theiPad, however, recorded a relatively lower profit margin than the iPhone 4. It had 5-10 percent lower sales as compared to the iPhone 4. This implies that the iPad is targeting the entertainment niche, while the iphone4 is concentrating its sales on the general communication market (Mudambi and Puck, 2016, p.7). One of the major benefits enjoyed by the iPhone is that the price of the products is not gotten directly from the consumer expenses, due to the existence of the unlocked iPhones due to the subsidy offered by the supplying companies for the exchange of the contract. Apple Inc. enjoys both internal and external economies of scale, due to its high capability of garnering the highest profit margin in the communication and entertainment market. Studies reveal that Apple Inc. since it was started; it has made both the huge losses and even profits (Seabrooke and Wigan, 2014, p.12). In the late 90’s, for example, it gave the poorest performance ever, but it was not closed. Instead, the marketing and quality strategies were changed, and this was the turning point of the company up-to-date. It has for several years, remained one of the best-performing companies in the world, with its products having the highest rate of consumption. Due to the need to understand the institutional structure of Apple Inc., this paper explains the various economies of scale, which have been to place Apple at the current market situation (Szapiro, 2016, P.54). Hence, we shall explore those advantages it enjoys due to its size and the size of the market it serves. At the end of the discussion, the reasons Apple employs the current Global Production Network should be a very clear and comprehended point. Economies of scale are the cost benefits enjoyed by a given company by intensifying its scale of production in the long run, in this case, Apple Inc. Most companies that enjoy economies of scale have the capability of reducing the cost of production by doing a large sum of output production. A company can enjoy both internal and external economies of scale. The internal economics of scale are those advantages a firm enjoys due to its increase in size, are the benefits a company enjoys as the entire firm increases in size, and the size of the market it serves. Apple for example, in relation to the GPN, it is able to enhance the most technical methods of production, due to its increase in both the size and the size of the entire firm. It is very likely that Apple Inc. experiences the technical economies of scale. This is due to the fact that, it produces a large number of devices. It is, therefore, able to regulate a number of products supplied to the market, increasing them to reduce the cost of production per unit and vice-versa. Due to Apple's immense financial size and given that most of its products accord those similar elements, the corporation can purchase equipment and machines, such as display screens and processing chips, at lower charges because of the ability to purchase in bulk; hence, profiting from Marketing Economies of scale (Chan, Pun and Selden 2013, p.62). Any business that wants to make a tablet that can compete favorably with the iPad's initial price of $499 would be forced to sustain high costs of production. Because of this challenge, Apple enjoys 70 percent of the tablet market (Chan, Pun and Selden 2013, p. 63). Moreover, due to the large amount of commodities that Apple produces, the company offers free investigation and development. Another part of Marketing Economies of Scale that the company profits from is the high volume of advertising. The Apple Inc. enjoys. Because of the firm’s size, advertising one output in essence advertises all other products generated by the company, meaning that the charge of advertising is much cheaper than it would be for a diminutive firm. Due to the above-mentioned advantages, Apple is able to employ the most effective GNP, to continue expanding its market and reducing the cost of production at the same time, (Yeung, 2014, p.45). References Baldwin, R. and Lopez‐Gonzalez, J., 2015. Supply‐chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses. The World Economy, 38(11), pp.1682-1721. Bergvall-Kåreborn, B. and Howcroft, D., 2013, December. The Apple business model: Crowdsourcing mobile applications. In Accounting Forum (Vol. 37, No. 4, pp. 280-289). Elsevier. Chan, J., Pun, N. and Selden, M., 2013. The politics of global production: Apple, Foxconn and China's new working class. New Technology, Work and Employment, 28(2), pp.100-115. Clelland, D., 2015. The Core of the Apple: Degrees of Monopoly and Dark Value in Global Commodity Chains. Journal of World-Systems Research, 20(1), pp.82-111. Cooke, P., 2013. Global production networks and global innovation networks: Stability versus growth. European Planning Studies, 21(7), pp.1081-1094. Liang, G., 2015. The “Fox–Apple” Partnership in the Global Value Chain: How Did Foreign Direct Investment and Contract Manufacturing Reshape the Landscape of the Electronics Industry? VALUE ADDED IN TRADE, p.141. Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional strategy’ perspective. Journal of Management Studies. Nezu, R., 2016. Changes in the Value Chain of Manufacturing Industries: A Japanese Perspective. The Ashgate Research Companion to International Trade Policy, p.187. Rioux, M., Ares, M. and Huang, P., 2015. Beyond NAFTA with Three Countries: The Impact of Global Value Chains on an Outdated Trade Agreement. Open Journal of Political Science, 5(04), p.264. Seabrooke, L. and Wigan, D., 2014. Global wealth chains in the international political economy. Review of International Political Economy, 21(1), pp.257-263. Soudien, C., Apple, M.W. and Slaughter, S., 2013. Global Education Inc.: new policy networks and the neo-liberal imaginary. British Journal of Sociology of Education, 34(3), pp.453-466. Szapiro, M., 2016. Global Value Chains and National Systems of Innovation: policy implications for developing countries (Doctoral dissertation, Universidade Federal do Rio de Janeiro). Yeung, H.W.C., 2014. Governing the market in a globalizing era: developmental states, global production networks and inter-firm dynamics in East Asia. Review of International Political Economy, 21(1), pp.70-101. Read More