Apple’s Fdi and Globalization Essay

Globalization- Today the mankind has vex a ball-shaped colonisation where severally and every thing is interlinked.The concept of global village or global merger is based on the grounds of globalization. Now thequestion arises in nonpargonils mind what is globalizationThe term globalization meaning the dumbness of human economy in to a exclusive inter national merchandise rather than m either national merchandises. For example, the orchard apple tree INC, an Ameri wad multinational corporation that concentrates in computer hardwargon and softw atomic number 18 comp wizardnts. It assembles its best cognize product i.e. mac computer, best selling telephony iph iodin in china. This is because the cost of end product is low repayable to cheap repel force. Thus globalization involves- loose throw of goods and services pardon figurehead of dig out and capitalFree access in engineeringNow, we will discuss the above points with more details.Free craftsmanship of go ods and services- Based on appleS INC p bentage appendage the party is selling its product such as the iPhone, MAC computer in many countries in the dry land. Generally it is a US based conjunction which is doing its business world-wide, in that respect be no hindrance for the bon ton not to sell its product in any dry land. So its means free trade of goods and services. Free movement of confinement and capital- In visualise with APPLE INC it means, apple commode move its labour force and inject capital in any country with no restriction. When talking about labour force it means the race who work for APPLE brush aside endure from one country to the new(prenominal). For instance, officers travel from one country to the other. We commonly see in the newfangleds that APPLE has appointed new officers in the UK, Germany or the US. Technical team travel from one country to the other when there is a major(ip) problem where other technician can not pose out what the pr oblem is. In footing of capital, it means APPLE has invested capital to make industries where its product atomic number 18 made and assembled.They hold factory in china and other countries in the world. Free access in technology- It means the the softwargon package of APPLE i.e. the iOS atomic number 18 existence used in many countries in the world. This is because the products that APPLE is selling use iOs software and these products are macrocosm sold in many countries in the world, so it means the technology is being freely woful from one country to the other. This encourages globalization. Another example is, a potential customer from Bangladesh looking to buy a shirt, he looks on the New look website. It normally making the sense that, a customer can access the catalogue from any where of the world. This is commonly k promptly as globalization. orchard apple tree Inc. is an American based multinational family whose stocks are listed in the New York declension Exchange and NASDAQ (National Association of Securities DealersAutomated Quotations) under the symbol AAPL.The company specializes in the picture, heightenment and manufacturing of electronic equipments standardized computers, software and clever phones. Business scheme orchard apple tree is currently working(a) on the specialism strategy by move strange elements in the design and development of its products. The differentiation strategy is defined as a strategy that aims to develop the products and or services that aim unique characteristics that are well similard by the customers and are valued by them. This strategy advances the market assign of the companies with respect to their counterparts (Porter, 1998).The success of the company in the global markets is out-of-pocket to its extensive focus on the market research and development for the development of its products and services. With reference to its business strategy, the company is in a continues process to design and advance the robust platform that can enhance the listing of ternion party content like mobile phone apps, games etc.on its online stock certificates or its iTunes store (Apple Inc.,2010).Markets and Distri notwithstandingionThe customer segments of the company are shared into various categories. The needs of the primary(prenominal) customers markets it caters are of gloomy and medium businesses, education sectors, Brobdingnagian corporations, government departments and other associate markets. In order to meet the needsand wants of these consumer markets, the company is utilizing direct and indirect distributionchannels including online gross sales services, retail stores and direct sales force as well as third partysellers, retailers etc. Using direct sales contacts with the customers is, believed by the company,leveraging its product sales and has demonstrated as an return to the company over itscompetitors. In order to maximise its sales and to make sure that the buyer s are receiving high gauge experience, the company is in a process to expand and rep descent its existing channeldistribution network (Form 10-k S EC Filing, 2010). contestThe company faces aggressive competition from the other market players. According toHoover (2011) the top three competitors of Apple Inc. in United States are Fujitsu TechnologySolutions (Holding) B.V., global Business Machines fellowship and MediaNet Digital,Inc. respectively. The needs of the markets it caters are highly competitive in nature imputable to the ever changing and travel technological environment and the rapid introduction of new technology based products. The main competitors of the company are pastime cost spark advanceership strategies by trim back the prices of their products or by asseverateing low profit margins to confine their market share.There are various forces that can impact the business and profitability of Apple. These factors whitethorn complicate the marketing mix product , price, place, promotion strategies, product performance, the quality and reliability of the product, innovative designs as well as consequently availability of up to date software services.Moreover, some(a) of the competitors of the company have number of resources which they can utilize against the company to provide the product and service flingings related to Apple,offer the business and consumer products and services similar to Apples products at low price range(Form 10-k due south Filings, 2010).Products and ServicesApple is currently using in house manufacturing system for the production of all of its products. wholly the products like Mac, iphone, ipad and ipod etc. are designed, developed and marketed via its main manufacturing hub which is rootd in the USA. But, as mentioned earlier,the company is outsourcing the production of some of its product parts to the various foreignistic and national supply reach collaborationists subcontractors. Some of the components of its products, ipod, are outsourced to its subcontractor in Hong Kong from where it is sent to theoutsourced production plant of the company (Linden et al, 2007).Some of these components are of high cost. While the other products like hard drive andflash memory etc. are sent to the other companies or outsourcing companies like Toshiba inJapan or Samsung in Korea.Large number of its components is of low cost. The metalcomponents of the products are made by the outsourcing unit in chinaware called Foxconn and the plastic components are products by the outsourcing units in capital of capital of Singapore (Brown, 1998, p.198).Finally these parts are assembled in the China and then transported to its sales outlets across theworld (Kahney, 2008).Outsourcing plantsIt has built its integrated manufacturing and design facilities in the various countries for example in California, Singapore etc. This global network allows the company to develop andlaunch the products in its markets of Americ a, Asia and Europe.It produces its products, for example ipads, in the Shanghai, China which has disposed it a cost saving advantage and lead to the growingd profitability for the company (Chaffin, 2002). But on the other hand, this outsourcing has increased the downsizing and un employment rate in the sign country (Rodriguez-Clare,2011).some of the outsourcing plants managed by the company are presentation troubled situations for Apple. ConclusionThe economy of the world has now choke free from any boundary. All the countries are now considered integrated with one another as one global market for carrying out variousactivities like trade, relations, etc.Evaluate EvaluateFrom one perspective, Apples world could not be rosier and its future shinier. arise from the rubble of a disintegrating company in 1997, Apple has reached the pinnacle of success in 15 nobble years. With a market capitalization of over $ cholecalciferol billion, Apple is amongst the most valuable and highly fat companies in the world. When it comes to customers, Apple is a bold trailblazer that leads the industry into new directions and forces others to follow. However, when it comes to the management of its supply chain and treatment of workers in the Chinese factories that make its products, it hides tin can the constraints of prevailing industry practices. Foxconn and its China-based subsidiaries are owned and controlled by the Taiwan-based Hon Hai Precision Industry Co., Ltd. Most of Apples worker-related problems were focused on Apples manufacturing partner Foxconn and its subsidiaries.Reports over the past few years have described instances of Foxconn employees committing suicide, presumably from working in an highly high stress environment. In addition there are reports of deplorable livelihood conditions, underage workers, below-standard wages, involuntary labor, and health hazards associated with the use of toxic chemicals and inadequate air filtration systems Finally, in the closing days of 2011, Apple proclaimed with great fanfare that it had joined the Fair repulse Association (FLA.Over the concept , Chinese factories have honed their tactics in concealing problems from the auditors by guardianship workers away from plants during audit visits, maintaining multiple sets of accounting books and workers staff office files, coaching workers to give right answers to the auditors questions in terms of working hours, wage rates, and overtime, et cetera, with promises of bonuses if the auditors were satisfied and implied threats of punishment if wicked problems were identified. Thus a highly choreographed audit allows for sealed violationsalbeit manageableto be disclosed and promises for corrective subjective process to be taken. Cutting out excessive hours would incriminate additional costs. For example, a reduction in the fairish working hours from the current 60-70 hours per calendar week to 48 hours per week would entail approximately a 30 pct + increase in the labor force to maintain the current rate of output.The Indicators of GlobalizationThere are three main economic and nancial indicators of globalization, these are international trade in goods and services the transfer of property capital from one country to another the movement of mess across national borders.Of the three, international trade and foreign investment are the most important. all(prenominal) of the three indicators will be examined in turn. International Trade International trade means that countries become more interconnected by means of the exchange of goods and services, that is, through imports and exportings. Multinational companies (MNCs) are major traders and account for a large proportion of international trade, with signicant proportions accounted for by trade between subsidiaries within the same company. So for example, Ford makes gearboxes in its factory in Bordeaux and exports them to its congregation plants in other European coun tries. Around one half of US manufactured exports and more than 60% of its imports ow within MNCs. International trade has increased more rapidly than global output which has been increasing by around 3% per annum. 2004)Foreign Direct enthronization (FDI)FDI is the main source of investment in developing countries. Recent year FDI has increased in these countries due to three reasons The rise of multinational companies Liberalization of world capital market Liberalization of world economiesAs in regard to APPLE INC, it has built factories in china to make its product so it has invested in china which is foreign direct investment. In the fresh years FDI has increased in this country due to three reasons The rise of multinational companies Liberalization of world capital market Liberalization of world economiesThe advantages of these FDI are as the following This FDI will allow a country to invest more than their saving. It is a authoritative source of investment in a country s uch as in china where it is nasty to encourage savings. FDI also helps to increase the import than the export. once more a FDI can be assumed as an injection which, in terms has a large multiplier effect in the economy. It creates demand in the receipent country and hence helps to increase real GDP. FDI helps to increase the employment in a country. For instance, the investment by apple in chine has created jobs for Chinese people to work and earn a living. They, sometimes offer higher wages than other national companies which helps to increases the living standard of that country. For e.g. in 1999 30 million people were employed in the developing countries directly or indirectly by the multi national companies. This has a controlling externality in the economy in the grand run. Sometimes FDI goes in the tradeable goods sextor of a country. Thus the countries export performance may increase and the country may enjoy higher competitiveness.The disadvantages if these FDI are as the following Multinational companies, such as APPLE tends to locate back their profit to their country. This may create a balance of payment deficit in the receipient countries if they function to increase their export earnings. Apple tends to use expertise of staffs from their country so the benefit that should come from employment becomes insignificant. Multinational companies such as these APPLE tends to locate their factories in the urban areas so there may be an increase in inequality in the economy. Again it may create pressure in the urban sector. There is a risk of tends that multinational companies such as APPLE tends to exploit the inherent resources of a country like gas, coal, electricity. Thus in the long- run there may be an environmental degradation and the country may suffer from natural degradation. Deficit in the long- run-However, FDI may have coercive impact on a country but they tend to be fuelled only in some developed countries.