Globalization of Apple Company - Essay Example

Globalization of Apple Company Globalization of Apple Company The Development of Apple Company since the Return of Steve Jobs in 1997 and Effects of Globalization on Its Operations Technological advancement and its effects on international trade is an everyday topic of discussion on most formal forums. This discussion cannot be complete without the mention of Apple Company and its tremendous effect on the world economy especially after the return of Steve Jobs as the company’s CEO. Apple Company has grown to be one of the world’s famous and wealthiest companies. It is known for its remarkable iOS products especially the iPad, iPod and iPhone, which carry sophisticated technology. Its outstanding stock price, which even when it had dropped by 63% in March 2013 off its peak in September 2012 still performed well in the market compared to other players. CEO Steve Jobs has also gained an iconic status for his intriguing nature. Steve Jobs transformed the failing image of Apple Company into one of the most successful wealthiest company in the history. The growth of apple began four years later after Jobs’ return as the CEO. This growth is also attributed to innovative products from the iPod to iPhone and iPad, which have changed the lives of people. With these products, it has integrated communication and information technologies for use in day to day life. Globalization involves various ongoing interrelated processes that include internalization of finance and trade (Dedrick, 2009.). Globalization affects business in many ways. Globalization has affected Apple Company both positively and negatively and amongst the positives, the major being increased profits. Apple operations have benefited from globalization in the several ways. Apple Company has mostly utilized advanced strategies relying mostly on importing, exporting and outsourcing. Apple Inc. realized the benefit of expanding both its market and operations all over the world especially in high potential markets. By July 2013, the company had opened 417 retail stores in 13 countries. It also established online stores in 38 countries (Dedrick, 2009). Globalization has led to emergence of new markets enabling apple to expand its operations outside America maximizations of sales and revenues. In 2013 fiscal year, Apple revenues had grown by 14.73% within the first two quarters of the year. This translated to $98.115 billion dollars. Most of this revenue was collected from overseas markets. Only 35%of the revenue was from American market (Freeland, 2011). Globalization has led to creativity in employing human resources at Apple. It has created few employee opportunities in America than in other countries. For example, the company relied on employees from international market to market its iPod. In 2006, workers from United States were 13,920 and 27,270 from foreign countries (Freeland, 2011). Apple has therefore established itself as a visionary company that has created job opportunities for people in America, as the government perceives it as the solution to unemployment, and outside America. This is helping to market and popularize the name, brand and products of the company. Use of cheap international labor has benefited apple largely in that it is able to reduce cost of operation and increase its revenues. Globalization of culture has increased demand of Apple products (Cowen, 2002). Many people across the world prefer apple products, as they are trendy and fashionable. This is because of the brand effects the company has globally. The company sometimes adopts purchase restrictions on a new product but consumers are willing to pay even twice the price in order to acquire the new product. People’s fetishism especially the young, has been on increase and this has translated to increased profits for apple Inc. Apple Ideology corresponds very well with globalization to benefit of the company. The ideology requires the engineers to pay attention to consumer needs and changes in the market, and then improve their products design as per customer needs, performance and service (Parker, 1998). This correspondence has helped apple identify customer-changing needs and meet them hence retaining its market share and acquiring new unutilized markets, which helps the Apple Inc. improves its performance. Key Developments in International Trade and Direct Foreign Investment Apple Inc. has shown several developments in international trade and foreign investments that have contributed to its great success. One major development is the adoption of retailing strategy. Apple Inc. adopted this strategy in 2001 and it has proved success. For example, One of the retail store opened in 2004 in Tokyo, Japan was the first of the company’s international retail stores (Bhagwati, 2004). This strategy aimed at expanding customer base and attracting first time buyers of Apple products. The use of online retail shop is also a major development Apple has successfully adopted to expand trade from local markets to international. With the online stores, the company is able to target buyers all over the world who cannot reach their physical retail outlets (Freeland, 2011). Globalization of market is another key development made by Apple Inc. The company is producing global brands for international markets unlike in the 1970’s when it produced brands that were of high quality but did not meet consumer expectations (Wolf, 2004). The company’s global market strategy has enabled its products to meet international expectations. Apple has benefitted from globalized market in various ways such as reduced market costs. This is because of standardized market activities. For example, by making an ad’s visual component the same in all the countries but dubbing television adverts and translating adverts into local languages such as Chinese. Apple Company has created a large market in China, which has enormous potential of e-business (Friedman, 2006.) .Apple Inc. has seen then potential in this market and entered into good trade partnership with china. Increased target of low cost workers is another development in international trade and direct foreign investments. Apple has invested on cheap foreign labor by targeting workers from other regions whose currency value is low compared to the dollar. In 2006 Apple employees in United States were about half of those in other countries and yet the labor cost in US was higher compared to the other regions. This strategy also helps in creating good alliance with the governments of various countries whose citizens are employees of such a company. Apple is continuously introducing of new innovative products in the market. Due to increased competition in the technology, market producers must stay alert of the new trends in the market in order to beat their competitors (Stiglitz J. E., 2002.). Steve Jobs was a dedicated innovative entrepreneur who kept the market saturated with new apple products. Since no single country can be a source of all innovations, this has triggered the development of international partners in bringing new products in the market (Stiglitz, 2006). For example, apple has collaborated with Japanese suppliers in supplying hard drives and display of the 30GB Video iPod. Trade developments at Apple contradict the classical trade theory and the factor production theory, which explains the differences in advantage shown by trading countries. According to these theories, countries produce and export products that have large amounts of production of the enormous production factors they possess while they import goods whose production factors may be scarce (Vernon, 1966). This is because the two theories fail to explain developments in technology as well as the changing business realities. The foreign direct investment theories contradict these developments. For example the Market imperfections theory, which states that firms constantly seeking market opportunities and investing in foreign countries is a strategy to capitalize on certain capabilities not shared by the competitors in foreign countries (Krugman P. , 1991). International production theory however corresponds to Apple developments. This theory suggests that the propensity of a firm to initiate foreign production will depend on the specific attractions of its home country compared to the resource advantages and implications for locating to another country (Krugman, 2008). Apple company has used this theory in its decision to collaborate with china and Japan in supply of some components of its products. The development of export behavior by Apple Inc. supports the theories of internalization. Apple has exhibited innovation related internalization taxonomies (Robert, 2010). This involves developing its export strategies from the stage of domestic marketing, pre-export engagement, experimental export involvement, active export involvement and finally committed export involvement. Apple Company is in the last stage where it is committed to meet the demands of its international customers. Ethical Issues Highlighted. One major ethical issue evident in Apple activities is exploitation of workers. The company targets cheap unskilled labor in foreign countries mostly China (Linden, 2007). This exploitation is evident from the fact that the high number of workers in foreign countries earns less money by almost a half compared to the few numbers of workers in America. There is also high disparity in payment of unprofessional workers and the professional workers both in America and in foreign countries. The company’s strategy of cost reduction has focused too much on profit maximization and abandoned the welfare of workers who are key in business continuity. This raises an ethical issue in relation to workers exploitation (Parker, 1998). A higher percentage of both American and foreign unskilled workers are poorly paid. The company has done this to minimize on labor costs. It does not put into consideration the lowly paid workers but instead uses this advantage of cheap labor to pay highly the few high ranked professionals. The company’s globalization of business has also created disparities in incomes and is proving to be of very little benefit to the economies of the foreign partners (Das Gupta, 2010). According to the company’s iPod papers of 2009, the largest share of financial benefits from the iPod went to the Apple Company. This is despite the fact that the devices are made in China. The financial benefit on china is incomparably low. Corporate Social Responsibility A business organization has a greater responsibility than just making profits (Baron, 2013). Apple Company is expected to put in place social responsibility measures that will enhance improvement of the lives of the many employees that depend on it for sustenance of their lives. It should be able to extend to its workers the economic benefits of their work. The company should also put in place policies that create good relations between it and the American community as well as the supply chain in other countries (Fransen, 2012). The company should involve the communities of countries in which it operates and support projects that are aimed at benefiting residents such as environmental conservation, sponsoring charity events and employees sustainability programs. Considering the ethical issues arising from Apple’s poor employee practices, as an ethical investment fund manager, Apple is not a priority investment portfolio, despite the tremendous profit and steady growth witnessed it the company, most of its activities resulting to this growth are unethical such as employee exploitation. The company has prioritized growth and cost reduction at the expense of employee welfare. Reference Baron, D. (2013). Business and its environment. Boston: PearsonPrentice Hall. Bhagwati, J. N. (2004). In Defense of Globalization. Oxford University Press. Cowen, T. (2002). Creative destruction : how globalization is changing the worlds cultures. Woodstock: Princeton University Press. Das Gupta. 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