Impacts of Globalization on Apple Inc - Essay Example

? Impacts of Globalization on Apple Inc. Impacts of Globalization on Apple Inc. Contents Introduction 2 Globalization 2 Figure 1: Globalization has Many Meanings 3 Figure 2: Dimensions of Globalization 4 Company Background: Apple Inc. 5 Figure 3: Comparative Number of Employees 2011 vs. 2008 7 Figure 4: Chart of Apple’s Share Prices from Jan 2011 to Nov 2011 7 Impact of Globalization 8 Figure 5: Historical Timeline for Apple II, Lisa and Macintosh 9 Company Market Share 14 Figure 6: Apple’s U.S. Market Share for the periods 2006 to 2011 14 Table 1: Comparative PC Vendors’ Performance in Shipments 15 and Market Share 15 Competition 15 Table 2: Global Smartphone Vendor Shipments and Market Share in Q2 2011 16 Strategies of Expanding 17 Recommendation 18 Reference List 19 Introduction Contemporary business organizations have increasingly been led to options for globalization on a more pronounced and crucial scale. Due to developments in the macro-environment, diverse internal and external factors have contributed to the decision to expand organizations’ sphere of operations from local markets to international domain. One of the most successfully recognized global organizations that recognized the relevance of globalization is Apple Inc. In this regard, the current research aims to examine the actual and potential impacts of globalization on the organization through a comprehensive examination of the factors that led to the decision. The discourse would hereby be structured through providing the relevant theoretical framework for the globalization, prior to delving into the corporate background and profile of Apple Inc. Subsequently, the impact of globalization would be expounded as applied by Apple in terms of presenting the changes it made on the organization’s market share, competition, and the strategies designed and implemented for globalization efforts to succeed. Globalization As emphasized by Riggs (2000), the concept of globalization has been studied to reveal that it has many meanings and dimensions. Figure 1: Globalization has Many Meanings Source: Riggs 1998, 2 Business practitioners could simply attempt define globalization as a process of expanding operations abroad. However, like the evolution in contemporary organizations’ structure, the concept and definition of globalization goes beyond the traditional view of doing business in another country or beyond international waters. In a study conducted by Al-Rodhan (2006), globalization was intricately defined as “a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities” (Al-Rodhan 2006, 2). By transnational, Lee Iwan, a professional with extensive cultural and international experiences described its meaning as corporations that “have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market” (Iwan 2007, 1). As indicated by Riggs (2000) on his key concepts of globalization, the dimensions of globalization are: “Economics: globalization = trade, money, corporations, banking, capital Political science: globalization = governance, war, peace, IGOs, NGOs, regimes Sociology: globalization = communities, conflict, classes, nations, agreements Psychology: globalization = individuals as subjects and objects of global action Anthropology: globalizaton = cultures overlapping, adapting, clashing, merging Communications: globalization = information as knowledge and tools -- INTERNET Geography: globalization = everything, provided it can be anchored in space” (Riggs: Dimensions, 1998, par. 2). Figure 2: Dimensions of Globalization Source: Riggs, 1998, p. 5 These dimensions were validated by Al-Rodhan (2006) when he emphasized that “globalization involves economic integration; the transfer of policies across borders; the transmission of knowledge; cultural stability; the reproduction, relations, and discourses of power; it is a global process, a concept, a revolution, and an establishment of the global market free from sociopolitical control” (Al-Rodhan 2006, 3). From the foregoing, one could deduce that globalization encompasses diverse inter-disciplinary perspectives that need to be considered and integrated within the scope on an organization’s operations. In this regard, after having touched on the crucial key concepts of globalization, its application would be evaluated through the experience of one of the most successful global organizations that currently exist: Apple Inc. Company Background: Apple Inc. Apple Inc. was created by two Stevens: Jobs and Wozniak in 1976 (Stanford 2011). Their remarkable journey of revolutionizing the computer industry started initially as a hobby and turned into the giant mogul it is today. Their historical timeline reveals that not every endeavor had been smooth sailing and profitable, as both incorporators struggled to be recognized for their innate talents and ingenuity in their respective crafts. Based in Cupertino, California, Apple Inc. now boasts of generating financial highlights amounting to “quarterly revenue of $28.57 billion and record quarterly net profit of $7.31 billion, or $7.79 per diluted share” (Apple Inc. 2011). Its official website aptly describes its organizational profile, to wit: “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices” (Apple Inc. 2011, par. 7). Apple’s products are categorized into iPad and iPhone, Mac, iPod and iTunes, and the iCloud. They have more than 300 stores worldwide, including countries such as UK, Japan, Canada, Italy, Australia, China, Switzerland, Germany, France, Spain and Hongkong. With regards to the number of employees, the report published in the Pingdom.com revealed that Apple “earned a massive profit of $419,528 per employee in the past 12 months. That beats Google, Microsoft, Intel and a bunch of other big tech companies by quite some margin” (Pingdom.com 2011, par. 1) where the number of employees reported totaled 46,600 in 2011. Figure 3: Comparative Number of Employees 2011 vs. 2008 Source: Pingdom.com 2011 Despite the small number when compared to other technology corporations, the amount of income earned was significantly high explaining the massive profit per head. Its stock prices has recently closed at $398.55 (Yahoo Finance 2011) and has exhibited a predominantly upward trend since the beginning of 2011, as shown below: Figure 4: Chart of Apple’s Share Prices from Jan 2011 to Nov 2011 Source: Yahoo Finance, 2011 Impact of Globalization The era of globalization that spurred Apple’s growth and development could be categorized under Globalization 2.0, identified as having lasted between the years 1800s to the year 2000, described as “the era when the world continued to "shrink," when multinational companies increasingly went global for markets and labor, and when technological innovations continued to reduce transportation, communication, and production costs” (Kerby n.d., par. 3). The predominant feature during this era is the instrumental contribution of New Information and Communication Technologies (NICTs) where “individuals no longer have to live in or travel to America or Europe to participate in educational, cultural, or business relationships” (Kerby n.d., par. 3). For Apple, the organization started to expand during the creation of the Apple IIc (Weyhrich 2011). According to Weyhrich (2011)”Apple also had the international market in mind when they designed the IIc. A special chip containing the keyboard map could easily be changed depending on the country where the computer would be sold, to make it consistent with regional keyboard differences. The external pushbutton would switch between the two different keyboards, between a UK and German layout, for example. In the U.S. version of the IIc. It switched from a standard Sholes keyboard (also known as “QWERTY”) to a Dvorak keyboard (which allows faster touch typing). The decision for the foreign keyboards came first; the added bonus for American versions of getting Dvorak came as an extra bonus, to save having two different cases (one for US and one for foreign versions)” (Weyhrich 2011, par. 12). From the timeline that was presented by Weyhrich (2011), the design and creation of Apple IIc occurred during the years 1984 to 1988, as shown below: Apple IIc – April 1984 – October 1985 Apple IIc (UniDisk 3.5) – November 1985 – August 1986 Apple IIc (Mem Exp) – September 1986 – December 1987 Apple IIc (Rev Mem Exp) – January 1988 – August 1988 Lisa – January 1983 – December 1983 Lisa 2 – January 1984 – December 1984 Macintosh XL – January 1985 – April 1985 Macintosh – January 1984 – August 1984 Macintosh 512 – September 1984 – December 1985 Macintosh Plus – January 1986 – March 1987 Figure 5: Historical Timeline for Apple II, Lisa and Macintosh Source: Weyhrich 2011 The expansion to European markets in the 1980s were corroborated in Funding Universe (n.d.) which disclosed that in 1981, Apple tripled its R&D budget to “$21 million, releasing 40 new software programs, opening European offices, and putting out its first hard disk. By January 1982, 650,000 Apple computers had been sold worldwide. In December 1982, Apple became the first personal computer company to reach $1 billion in annual sales” (Funding Universe n.d., 1). With this initial information at hand, the immediate effect and impact of globalization on Apple therefore is its ability to dramatically increase its revenues through the contribution in sales from the foreign markets. Products The major product categories of Apple could be broken down into seven categories according to Gobry (2011). The first major line is the iPhone which usually undergoes a “major redesign every other year and a minor refresh in-between” (Gobry 2011, par. 4). The second category is the iPad, which like the iPhone undertakes modifications regularly. The Apple TV is the third major category, which might experience major improvements next year. The Apple TV lets one “stream all movies and TV shows available on the iTunes Store to one’s HDTV on a pay-per-view basis with purchases stored in the cloud for future on-demand access” (CNET Reviews 2010, par. 1). The fourth category is the iPod. Among Apple’s product categories, the iPod is the one which seems to have a declining market with the introduction of the iPhone. Unless a major product alteration is done, the iPod might meet its ultimate end. The fifth product category of Apple is the laptop. The iMac is another major product group which has had a satisfying market acceptance. The Mac Pro is the seventh product line of Apple which has suffered a low demand. Advertising Any organization wanting to be a global company will only be successful if it has an effective advertising campaign. Apple is no exception. Its success can be partly attributed to its exceptional advertising all over the world. Levins describes Apple’s advertising strategy as its “core pillar” (Moren 2007, par. 3). According to Levin, “It’s bringing in new people to Apple products” (Moren 2007, par. 3). Apple started advertising its products in the late 1970s. Apple’s advertisements in the 80s convince consumers to purchase an Apple computer. Their advertisements featured a lot of text and very minimal images shown. In the 90s, they started the campaign “Think Different” where they featured famous people (Chapman n.d., par. 4). In the 90s, the advertisements of Apple became more focused on the product features with very little text and it became more artistic. Chapman goes on further to say that as the hardware of Apple changed their ads also changed (n.d., par. 8). During the 2000s, Apple focused on television advertising especially when they promoted the Mac vs. PC ads. At present the advertisements for Apple computers emphasized the product features and usually have a white background. On the other hand, their advertisements for the iPod line have bright backgrounds with silhouetted figures (Chapman n.d., par. 10). Although every Apple product has its own advertising theme, one can observe that all their campaigns are simple yet elegant and gives an image of friendliness that boasts of a unique design exemplifying the characteristics and features of every Apple product (Moren 2007, par. 5). The advertising campaigns employed by companies can either make or break them. Apple is one company which is an example of an organization which has revolutionized its advertising campaigns as it transformed its products. Apple is a perfect example of a company whose advertising campaigns have greatly contributed to the global acceptance and massive success of its products. Organizational Culture Apple’s organizational culture is one of the “most distinct corporate cultures in the business” which was created by the late Steve Jobs (Reisinger 2010, par. 4). Reisinger identified ten unique features of Apple’s culture. First on his list is the “focus on design”. Apple puts much importance to the design of its products because it knows what the consumers want and they want to meet the consumers’ expectations. Second, Reisinger noted that Apple stakeholders must believe in the late Steve Jobs because he was the one responsible for the status that Apple is enjoying now. He turned around the company through his vision; thus, believing in him is of utmost importance. “Forget everything that came before it” is the third unique feature of Apple’s culture according to Reisinger. Employees must adapt to the system that Apple has because Apple thinks and does things differently as compared to other companies, in developing their products. The fourth characteristic of Apple’s culture as suggested by Reisinger is that Apple believes that it is better than all others. This aspect of Apple’s culture is very much influenced by Steve Jobs. He believes that Apple is the best company in the world. The fifth quality of Apple’s culture is it “take flaws to heart” (Reisinger 2010, par. 10). Any customer complaint or criticism is taken seriously by people in Apple. The company always responds to those complaints and sees to it that they act on it immediately. Another trait of Apple’s culture is that it never admits defeat. Even if their products get bad reviews, they always find ways to rectify it. The seventh attribute of Apple’s culture is its attention to details. Apple always strives to go to that extra mile in developing its products (Reisinger 2010, par. 12). One other distinctive feature of Apple’s culture as cited by Reisinger is that “only Steve Jobs is indispensable” (Reisinger 2010, par. 13). Any other employee of Apple can leave the company without affecting Apple’s performance except Steve Jobs. However, with his demise, many people are now wondering whether Apple can still retain its supremacy. The importance of secrecy is Apple’s ninth distinguishing feature. Secrecy is something which cannot be undermined in Apple. Because of the very confidential information that thrives within the Apple organization, it is essential that every employee realize this. Finally for Apple, “domination is everything” (Reisinger 2010, par. 5-15). It is the ultimate vision of Steve Jobs and it is what he expected from every employee of Apple. Company Market Share A review of the market share of Apple in the US market reveals that since 2006, it has continually exhibited increasing patterns, as shown in the figure below: Figure 6: Apple’s U.S. Market Share for the periods 2006 to 2011 Source: Slivka, 2011 From a meager 4% in the first quarter of 2006, Apple’s market share climbed to about 13% by the third quarter of 2011. On a comparative basis with other personal computer vendors, the following table illustrates Apple’s performance in terms of shipments and market share from the third quarter of 2011 as compared to the same period in 2010: Table 1: Comparative PC Vendors’ Performance in Shipments and Market Share Source: Gartner's Preliminary U.S. PC Vendor Unit Shipment Estimates for 3Q11 (Thousands of Units); cited in Slivka 2011 On a global scale, the report published in the OSX Daily (2011) indicate that “Apple will overtake HP as the worlds top PC vendor by mid-2012, thanks to tremendous iPad growth and increasingly strong Mac sales. Currently, HP holds the top spot at 16% of the PC market, but Apple is already sitting very closely behind at 15%, and the anticipated release of iPad 3 early next year could very well be the product that pushes Apple into the lead” (OSX Daily 2011, pars. 1 & 2). Competition As deduced from the above data, Apple ranks third among the PC vendors in the US, where Hewlett Packard ranked first, followed by Dell. On the other hand, in terms of considering Apple as a Smartphone vendor, the report published in the Business Wire (2011) revealed the Apple becomes Number 1 as the global smartphone vendor for the second quarter of 2011. Table 2 below illustrates the comparative market shares and shipments among competitors on the smartphone arena: Table 2: Global Smartphone Vendor Shipments and Market Share in Q2 2011 Global Smartphone Vendor Shipments (Millions of Units) Q2 '10 Q2 '11 Apple 8.4 20.3 Samsung 3.1 19.2 Nokia 23.8 16.7 Others 27.1 53.8 Total 62.4 110.0 Global Smartphone Vendor Marketshare % Q2 '10 Q2 '11 Apple 13.5 % 18.5 % Samsung 5.0 % 17.5 % Nokia 38.1 % 15.2 % Others 43.4 % 48.9 % Total 100.0 % 100.0 % Growth Year-over-Year % 50.4 % 76.3 % Source: Business Wire 2011 Strategies of Expanding The remarkable growth and performance of Apple, as manifested through increasing prices in their stocks, coupled with exemplary financial income and market shares (both in the domestic and international markets) validate that their strategies for expanding globally are effective and successful. As emphasized by Bryant (n.d.), “Apple utilizes several different strategies to expand its presence in global markets including, but not limited to foreign outsourcing and importing, exporting, foreign licensing, and foreign direct investment. Foreign outsourcing and importing provide production at cheaper costs which makes products such as the iPad sell for $499 instead of $14,970 (Gewirtz 2010). “Apple's mainstay Macintosh computers historically have not been big sellers outside the U.S., due primarily to the machines' higher prices and limited distribution. But analysts said Apple's iPod music players helped the company break into more markets and raised consumers' appetites for related products” (Kane and Rohwedder 2010, cited by Bryant, n.d.., par. 2). Further, their significant investment in R&D is instrumental in the design of innovative products that address the changing needs and demands of their global customers. Through the steering of visionaries, with Steve Jobs at the helm before he died just this October 2011, leadership and professionalism in management style, in policies and procedures, in encouraging diversity and equality in employment, as well as in scanning the external environment for vast opportunities in emerging markets, Apple continues to design strategies that assist and guide their thrust through being the market leader on a global scale. Recommendation The current research examined the actual and potential impacts of globalization on the organization through a comprehensive examination of the factors that led to the process. By offering innovative and creative products that are perceived to be of high quality, consistent with the exemplary corporate image being manifested, Apple succeeded in their globalization efforts that started in the 1980s. The impact of globalization is seen through the marked growth and improvement in financial performance, share prices, market shares, and ability to address the strategies implemented by its competitors. By maintaining a proactive stance, Apple exhibited leadership in most of its current products that have surpassed the performance of the products offered by its competitors. From Apple’s experience, contemporary global organizations could learn that globalization, to be successful, requires being vigilant within the industry in which they operate. Also, by strengthening ones core competence and scanning the external environment for opportunities and threats, global organizations could actively and aggressively compete within a more dynamic and multidimensional environment. Reference List Al-Rodhan, N.R.F. 2006. Definitions of Globalization: A Comprehensive Overview and a Proposed Definition. Geneva: Geneva Centre for Security Policy. Apple Inc. 2011. 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