Globalization and Localisation at Apple Inc - Essay Example

Apple Inc. Table of Contents Apple Inc Table of Contents 2 Introduction 3 Globasation and Localisation 5 Glocalisation 8 References 10 Introduction Global Marketing is an intense phenomenon – over two hundred giant organizations exist which are known multinational players, having sales which exceed a quarter of the entire world’s economic activity (Kotler P. & Keller K. L., 2006). International marketing may be described as the business activities related to the process of planning, pricing, promotion, and the ultimate direction of the flow of company’s goods & services to clients in more than one nation for profit generating purpose. Organisations face the challenge of adapting the controllables, in the form of the marketing mix, to the uncontrollable aspects in the different domains so as to achieve satisfactory levels of output. These uncontrollable elements often decide how an organisation operates - countries have different demographic attributes, tax structures, political and legal environments. Apple Inc. is one such orgabisation that has worked hard to create an image of a people oriented company and thus it has been a top priority for the company to identify with the masses and create a community (Weiss A., 2005). Challenges are immense for a global company – it faces issues like foreign exchange rate fluctuations, unstable government, shifting borders, corruption and counterfeiting. In spite of this it is a prerogative for the companies to internationalize their operations. They need to go closer to the markets they serve and take local factors of production into consideration. Multinational organisations have definite marketing objectives in mind when they venture into operations. The biggest queries center around their choice of country (which is determined by the competitive advantage, market attractiveness and risk associated with the nation), the mode of entry (different modes differ on the level of profit potential, risk, control and most importantly, commitment), and finally, the way in which the company adapts its marketing program to the local specifications. Before going into the details of Globalisation, Localisation and Glocalisation, it may be beneficial to understand how a company is faced with the challenge of adapting its marketing campaign – which involves the product(s), the marketing communication, the distribution format that the company adopts and the price at which the company decides to sell. Straight extension, product adaptation or product inventions are the strategically poised options open to the firm on the product front. It basically deals with the decision of the company to go with its existing portfolio, modifying it to suit the new markets or developing something new for the markets. Companies may choose between communication adaptation and dual adaptation when they chalk out the communication that the company hopes to pursue. Different distribution channels exist – the company is required to take a call on the implementation of local production as against a whole channel concept. The company has to consider issues like the gray market and price escalations when it is deciding on the viable pricing strategy for the product. Companies have also been a separate face of globalisation - Bladox, a Czech firm manufacturing SIM cards that can be used in unlocked iPhones received orders from over 100 countries in 2008, soon after the launch of the mercurial iPhone. This was a development on the fact that that these devices were ‘locked’ from operating in any other network apart from those designated by Apple. Consumers did the obvious – they found out a way to use the device in their preferred network (O’Hara C., 2008). Globasation and Localisation Globalisation may be described as the ultimate process of reduction in protective barriers to the flow of money and goods by the regulations of international trade. Localisation on the other hand, can be described as the flow of ideas, information, technological expertise, money and goods with the ultimate goal of protecting local economies worldwide (Hines C., 2002). Both are variants of internationalism – which is a global flow of information and business practices. On a corporate scale globalisation may be perceived as the coming together of national economies towards a common global economy through competitive trade practices aptly supported by technological advances. The theory of competitive advantage starts to play a role as corporations start to use the resources at the cheapest price available. Globalisation has far reaching implications – it may involve governments citing with the interests of the speculative investors in lieu of the common citizens, it may lead to a steady downgrading in the levels of environmental regulations, social welfare standards and finally, wages in the countries. It may also result in the gradual moving of the world population towards a monoculture – with uniform tastes and preferences. Localisation as a contrast brings about trends which reverses the patterns pertaining to globalisation. Parameters which promote localisation are those which increase the control of the local communities in nations while deciding business programs. An ultimate aftermath of the localisation process may be believed to be the increase in the level of cohesion among the members of a community, a gradual reduction in the levels of inequality and a gradual increase in the levels of livelihood and protection of the environment. Localisation favours the flow of useful information, technological know how and better business know how with and emphasis on the local impact of trade regulations. The following seven general isues the realm of policymaking may be identified as major building blocks in the road towards localisation – Building protective clauses for the domestic markets in countries. Encourage the local production and marketing of goods as against dumping. Building up a favourable credit scenario in the domestic market to encourage the stimulus of the local money markets in the countries. Building up a competitive environment to diminish the probabilities of the formation of monopolies. Induce a sense of corporate social responsibility among organisations to protect and nourish the local business environment. Ensure the democratic involvement of local population in the business process. As the organisations move from global subservience to healthy international competitiveness they are bringing the best of the two worlds – the best management and operational practices being followed in the developed markets to the untapped developing markets with access to more competitive resources. The localisation concept has often been viewed as major alternative to globalisation. It has gained popularity among several communities which have realized that they need to pay heed to the preferences of the local clientele so as to prosper and have a stronger possibility of continuance. Organisations have thus benchmarked their operation, which is the level of efficiency rather than adhering to the end specifications of the product, so that they can adapt their end offerings according to the taste and preferences prevalent in the final markets. Thus “Globalisation is defined on an institutional level as a strategy of constraints that have to be adjusted in all local sites. Localisation is the implementation of globalisation constraints in agreement with the constraints required by the local environment of the firm and the final user.” (Tixier M., 2005). The web is one such place where the effects of globalisation and localisation can be best understood and analysed. In the fast food markets globalisation calls for the implementation of the worldwide parameters in accordance to the local constraints imposed by a company’s business environment. Thus U.S. food majors are moving into a recognisable pattern for their websites. Their websites are found to have two sections - one emphasising the global aspect of the company and the other the local offerings of the company. The major companies which have adopted such an outlook include names like McDonald’s, KFC, and, to a lesser degree, Pizza Hut and Ben & Jerry’s. In the hospitality sector the companies had a focus more oriented towards globalisation than localisation at the turn of the century, as was the banking industry. Major America based financial organisations like the Bank of America and Morgan Chase had no European website till 2002 (Tixier M., 2005). Sports equipment companies on the other hand have used the internet to leverage a position of a strong global presence. Nike, for exmple has used its website to communicate effectively with the diverse clientele it caters to. As a part of the global business community, Apple has also been affected by globalisation. The company was hit with the news of a sweat shop story in 2006. A news article appeared in Britain’s Mail about how Apple’s iconic iPod was being manufactured in Chinese factories by staff who earned salaries which was about twenty five percent of the retail price of the iPod in the United Kingdom. The news article pointed that the workers made US$50 a month working to the tune of fifteen hours daily. It further reported the extreme conditions which the labourers were subjected to – o sleep in the plant, had little access to overtime benefits, had minimal provisions of access to visitors and how they had to work continuously while standing (Joseph C., 2006). The ipod was one of the largest selling products in the Apple portfolio and its’ star revenue generator over the last decade. The news article brought to light the actions of the organisations to take advantage of the wage differential across working environments and how they use legal loopholes and shortcomings in the international business regulations to add to their bottom line significantly. As on January 2007, Apple had sold around 88 million iPods. Organisations have realised that global product development to be a basic business process, and thus they have tried to improve their capacity to develop streams of the new products meeting the needs of the customers within an ever decreasing cycle time (Subramaniam M. et al, 1998). Global products are different from their local counterparts; they cater to markets in multiple countries. In the process a sizeable majority of these products are neither standardized, nor unique for the markets. Organisations look forward to having country wise specifications over a core offering. In the perspective of Apple, the challenge mainly centers on creating awareness about their offerings, which will face local impediments. Even in existing markets, the organisations often move towards better practices on the wake of a global phenomenon. In a press release in June 2005, the company announced the launch of an initiative to recycle existing iPods. Customers could return unwanted iPods across all stores in the United States and get discounts on the newer varieties of the eco-friendly variants of the machine. This move was seen by the industry as a positive measure being taken by the organisation to build on a strong e-waste disposal system that it had in place (Angell L. C., 2005). Glocalisation Glocalisation is a newer concept than globalisation and localisation – it traces its roots from both the concepts and their intersection. It refers to the incorporation of the better elements of the above in a single frame of reference. Glocalisation is a better way of understanding the various markets that an organization operates in. Different interpretations have been developed by different companies, IBM has ventured into different markets and developed different organizational structures and worked towards coordinating with local cultural needs. Organisations are faced with the challenge of replicating the successful systems worldwide, often neglecting the local factor which dominates the use of resources. Global experiences of localisation have been mixed. It has been seen that the success of this venture is only viable in scenarios where the top management is inclined to delegate authority, shift power from the top to the bottom. Participants in the end market should be encouraged to be active participants in the design, execution, monitoring and maintenance of business projects meant for their markets (Glocalisation: globalisation plus localisation, 2002). Apple also understood the power of this novel concept. The Apple iTunes Music Store now supports a total of 22 markets. A cursory look at the company reveals how the organisation has geared towards understanding the local flavour and nuances of the markets – the website has drop down menus which drive the customers to products of their choice and stores near their locality. Companies are at risk to lose their competitive advantage when they start operations in foreign countries. Therefore they must change their strategy and evolve with the newer markets (Alimiene M. & Kuvykaite R., 2007). As marketing activities evolve, companies face a critical choice: to standardize their operations or to adapt strategic marketing solutions. For Apple Inc. the move has been to create an aware market space and infuse local flavour in its offerings. References Alimiene M. & Kuvykaite R., (2007), Standardization/Adaptation of Marketing Solutions in Companies Operating in Foreign Markets: An Integrated Approach, ENGINEERING ECONOMICS 2008 No 1 (56) Angell L. C., (2005), Apple announces iPod recycling program, [Online] Available: http://www.ilounge.com/index.php/news/comments/apple-announces-ipod-recycling-program/ [20 May 2009] Glocalisation: globalisation plus localisation, (2002), [Online] Available: http://www.swaminomics.org/et_articles/et20020623_glocalisation.htm [20 May 2009] Hines C., (2002), Time to Replace Globalization with Localization, [Online] Available: http://www.mitpressjournals.org/doi/abs/10.1162/152638003322469240 [20 May 2009] Joseph C., 2006, iPod City, Mail, June 11 2006 Kotler P. & Keller K. L., (2006), Marketing Management, ISBN 8177586904 O’Hara C., (2008), iPhone Underground, Foreign Policy, [Online] Available: http://proquest.umi.com/pqdweb?index=0&did=1475699391&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1242817389&clientId=78175 [20 May 2009] Subramaniam M. et al, (1998), GLOBAL NEW PRODUCT DEVELOPMENT PROCESSES: PRELIMINARY FINDINGS AND RESEARCH PROPOSITIONS, Joumal of Management Studies 35:6 November 1998 Tixier M., 2005, Globalization and Localization of Contents: Evolution of Major Internet Sites Across Sectors of Industry, Thunderbird International Business Review, Vol. 47(1) 15–48 Weiss A., (2005), The usability era arrives, NetWorker, [Online] Available: http://proquest.umi.com/pqdweb?index=0&did=845809771&SrchMode=1&sid=2&Fmt=2&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1242816753&clientId=78175 [20 May 2009] Read More