INTRODUCTION

Globalization

Everyone has its own understanding about this concept. Their definitions and understanding about the

concept of globalization differs. The most unified definition of globalization explains that it is a concept

in which the different economies of the world amalgamate or unify with each other by reducing the

barriers like tariffs of international trade, fee related to export and quotas on the imports. The

globalization focuses on maximizing the economic efficiencies of the countries that are related to the

wealth, products, services, manufacturing, supply chain, labor etc. by developing and fostering

international relations, understanding and competition. It specifies the processes and operations that can

be utilized by the economies, cultures and businesses with the help of different modes like

communications, supply chain activities, distribution networks etc. Globalization can also be defined

as a process that, based on international strategies, aims to expand business operations on a worldwide

level, and was precipitated by the facilitation of global communications due to technological

advancements, and socioeconomic, political and environmental developments.

Globalization provides organizations a superior competitive position with lower operating costs, to gain

greater numbers of products, services and consumers. This approach to competition is gained via

diversification of resources, the creation and development of new investment opportunities by opening

up additional markets, and accessing new raw materials and resources. Since trade is such a major way

people interact with one another, it follows that globalization has some key effects on the economy.

 It has allowed manufacturers to export products all around the world.

 It has reduced demand and halted growth for small-scale manufacturing.

 It has made it possible for a company in the United States or Canada to outsource its production

and services to developing countries like China or India. This provides new jobs in developing

countries. It has reduced the value of intellectual property.

 Benefits from deeper division of labor and economies of scale.

 Gains from the sharing of ideas / skills / technologies across national borders.

 Advantages from the freer movement of labor between countries.

 Globalization has been linked to rising inequalities in income and wealth.

 Strong demand for food and energy has caused a steep rise in commodity prices.

 Irreversible damage to ecosystems, land degradation, deforestation, loss of bio-diversity.

Subject of study - Apple Inc.

Apple Inc. is an American based multinational company whose stocks are listed in the New York Stock

Exchange and NASDAQ (National Association of Securities Dealers Automated Quotations) under the

symbol AAPL. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976.

The Company specializes in the design, development and manufacturing of electronic equipment’s like

computers, software and smart phones. The hardware related product line of the company is well known

to everyone; including iPhone, Macintosh and iPad and iPod respectively. While there are multiple

range of software’s offered by the company to its customers that ranges from operating system to the

entertainment and educational based software suits.

Why I chose Apple Inc.?

Being from a technical background, I was always attracted to gadgets and sophisticated technology.

Moreover Apple’s Steve Jobs, a pioneer in education technology is one of my role models. His

creativity in shaping new platforms for technology has influenced teachers, students in a positive way.

Apple Inc. stands out as the world’s most famous, and currently richest, company. Mainly I chose Apple

Inc. for three things: its intriguing CEO Steve Jobs, who has achieved iconic status in death as in life;

its amazing iOS products, especially the iPhone and the iPad, and their predecessor the iPod, which

have literally placed sophisticated technology in the hands of the masses; and its stratospheric stock
price, which even when in March 2013 it had dropped to 63 percent of its September 2012 peak, gave

Apple the highest market capitalization of any company in the world

Globalization and its Impact on Apple Inc.

The company was established in 1976 and was incorporated in the early year of 1977 (Apple Inc., 2011).

By the end of the year 2010, the company had over forty five thousand employees working on full time

basis and around three thousand employees worldwide. It was noted that the company had earned the

annual sales of around sixty seven billion US dollars from its worldwide operations (Apple Inc., 2010).

By the end of year 2010, the company had over three hundred retail stores (Spence, 2010) in ten

countries (Apple Inc., 2011) as well as an online store that offers its products to the customers across

the globe. The company is listed as one of the most admired companies in the United States and in the

World for four consecutive years (Fisher, 2008; Colvin, 2009; Fortune, 2010).

At the end of fiscal 2012 (yearend September 29) Apple had $121.3 billion in liquid assets: $10.7 billion

in cash and cash equivalents, $18.4 billion in short-term marketable securities, and $92.1 billion in long-

term marketable securities (Apple 10-K 2012, 44).In February 2015, Apple became the first U.S.

company to be valued at over US$700 billion. The company employs 123,000 full-time employees as

of September 2017 and maintains 499 retail stores in 22 countries as of December 2017. It operates the

iTunes Store, which is the world's largest music retailer. As of January 2016, more than one billion

Apple products are actively in use worldwide.

Apple Inc. percentage of revenue by region for the year 2013

Source: Standard & Poor’s Compustat database, annual.

Globalization opportunities, challenges and response

The company sells its products worldwide through its retail stores, online stores, and direct sales force,

as well as through third-party cellular network carriers, wholesalers, retailers, and resellers which in

turn is increasing the net sales as well as the net profit. Apple has started to look at other countries to

do their final assembly production for example in California, Singapore etc. This global network allows

the company to develop and launch the products in its markets of America, Asia and Europe. It produces

its products, for example iPad, in the Shanghai, China which has given it a cost saving advantage and

lead to the increased profitability for the company (Chaffin, 2002).

Apple’s global network allows it to produce its products in America, Asia, and Europe. But,

globalization can cause problems for companies. Some of the subcontractors managed by Apple are

making the company look bad. One outsourcing plant had over forty minors working, Foxconn had an

abnormally high suicide rate, and another company was caught with high levels of waste

release. Although Apple was probably not aware of these unethical practices, the blame falls on Apple

because they employed these subcontractors. This creates several problems for the company and makes

it harder to operate in the global market. Though Apple enjoys a strong brand among consumers that
makes demand for its products inelastic, its sales are sensitive to an impeding down turn, especially in

Europe.

Apple is looking to produce in other countries, not just to reduce costs but to also increase revenue.

IPhone market share in India isn’t in the top five smartphones so there is a large opportunity to establish

its brand with the world’s 2nd largest populated country. India is a strong candidate because the labor

wages are approximately 25% the cost of labor in China, they have the experience and skill to quickly

learn the manufacturing process for iPhones, and they have the ability to keep up with labor demands

during peak seasons. The company offers various deals on the events like Christmas, Saint Peter’s day,

black Friday etc. These offers are then expanded on a global basis. This globalized offering increased

the sales of company products not only in the US markets but also in the European markets (Smith,

2010).

Conclusion

The economy of the world has now become free from any boundary. All the countries are now

considered integrated with one another as one global market for carrying out various activities like

trade, relations, etc. Apple Inc. was hugely benefited because of globalization. Benefits include

international opportunities to its employees, speed to market for its customers to have the latest and

greatest technology, and efficiencies in the supply chain with the sub-component suppliers. They

distributed their merchandises throughout a global trade. More and more consumers will provide their

experiences and suggestions to help Apple perfect their products. But in order to be successful in this

global market Apple Inc. must outsource to reach its high demand.
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