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Company Analysis: Apple Inc

Introduction

Apple Inc was established in 1976 as a partnership between Steve Jobs, Woszniack and Wayne. The company became a market leader as innovative computer designers were concerned. Sales stagnated after 1985 when Steve Jobs left the company, thus the hard times for the company began. However, the return of Steve Jobs in the late 90’s raised the company to the rank of one of the most profitable companies in the United States. At the end of 2012 financial year, the company posted its net profit of 66 million dollars, and was ranked sixth on the list of top largest computer manufacturers (Jinjin, 2013).

Apple thrives on making unique, innovative designs that are intended to fit customers’ tastes. The company’s spirit of thinking big is the engine that works behind its innovative and stylish designs. Company’s products vary from computer hardware and software, mobile electronic devices to electronic peripherals and information technology solutions. Its most popular product so far has been the iPod, a portable media player. To serve its expansive clientele, the company has employed over 72,000 workers that spread all over the world and work in different branches (Jurevicius, 2013).

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Worth noting that the company faces competition from other multinational companies such as Samsung Electronics and Dell. For this reason, the company continuously works on device systems in order to remain competitive. The company’s strengths in terms of competition are the loyalty to its customers, its unique and innovative products, reputation and marketing network. Yet, weaknesses appear in the form of the high prices for its products, the incompatibility of the products with different operating systems, patent and copyright infringements and declining market share. The opportunities for Apple are increasing demand for its product, challenges such as tax increments, rapid changes in technology and competition must be addressed to ensure the company’s survival. Thus, the company has taken advantage of globalization by venturing into new markets where prospects of making profits are high. This paper will analyze how Apple Inc. has been affected by globalization.

Globalization

Globalization refers to the integration across borders, which allows the free movement of people and goods across national boundaries (Hitt, Ireland, & Hoskisson, 2013). This integration is a result of interactions between ideas, cultures and people from different regions of the world, fuelled by the recent advances in technology. With increased competition for raw materials and dominant position on the market, many companies understood the need of venturing into foreign markets to take advantage of possible opportunities. Such activities have led to the emergence of multinational corporations.

Effects of Globalization on Apple Inc

Apple Inc has been facing competition over the years from other established multinationals such as Samsung. The computer and mobile devices industry is today characterized by stiff competition resulting from rapid changes in technology and the entry of cheap electronic devices into the market from Asian manufacturers. Therefore, companies dealing with these electronics have been forced to reduce their profit margins to remain competitive prices. Alternatively, they are forced to find ways to reduce cost of production. This last approach creates the need to find the cheaper raw materials and labor possibly from other countries. Such scenario depicts the situation in Apple Inc.

Initially, Apple Inc maintained an in-house production strategy where all of their products were manufactured in the United States where their headquarters is. However, as the cost of production in the US relatively to other countries continued to rise, Apple had moved production to other countries with lower costs.  Currently, a number of its products’ parts are manufactured by foreign companies outsourced by Apple Inc. Yet the design of those parts is developed in the US. For example, plastic parts are produced in Singapore, but the metallic parts are produced by Taiwan’s Foxxconn. In addition, some parts are assembled in China and distributed directly to the market (Jinjin, 2013).

To increase its market share, Apple shifted focus from the sorely American market to the global market in its early years. Apple’s products are now available worldwide. With the recent advances in information technology, clients around the world can observe and purchase their products and information related to the products from the internet. After the purchase products are shipped to destinations on land or in the air. Globalization, therefore, helped the company to grow by facilitating its interaction with manufacturers and sales partners. Access to cheaper raw materials, labor and a larger market in foreign nations, make Apple Inc to remain competitive.

The Application of Industrial Organization and Resource-based Models by Apple Inc

  • Industrial Organization Model of Above- Average Returns

This model emphasizes the role of a company’s external environment on decisions made by managers. It states that environment, particularly the prevailing conditions in a given sector have a greater influence on companies in that sector than the company’s managerial decisions itself (Hitt, Ireland, & Hoskisson, p. 14). The model proposes that companies should find ways of reducing the cost of production or finding more attractive markets through differentiation. To increase its average returns, Apple Inc. should venture into countries where labor and raw materials are cheap as well as small competition. Additionally, they should diversify their products by developing new unique products that meet current market requirements.

  • Resource-based Models of Above- Average Returns

Unlike the industrial organization model which recognizes the impact of the external environment on the company, the resource-based model proposes that company’s unique resources and capabilities endued it with a competitive advantage, and enabled to attain above average returns (Hitt, Ireland, & Hoskisson, 2013 p. 16). The success of the company depends on access to unique resources as well as its capabilities, as opposed to the impact of the external environment. From this model, Apple’s unique resources are its ability to produce unique and innovative products. To remain competitive, Apple should improve its capability to produce more unique products through employee training, expansion and sourcing for talents.

  • How Apple’s Vision and Mission Statement Influence the Corporation’s Overall Success

Though Apple lacks a clear and properly defined mission and vision statement, its strategy is inspired by the spirit of thinking differently (Jinjin, 2013). The products are meant to fit customer tastes. Meeting customer needs has been Apple’s strategy in maintaining a large market share. New innovations and upgrades to existing products have helped Apple maintain a larger share on the market.

  • Stakeholders’ Impact

Hitt, Ireland, & Hoskisson (2013) stated that there are three types of stakeholders; shareholders, customers, and organizational stakeholders or employees. Shareholders invest in Apple Inc through the capital market. They expect their investment will be well utilized by the company, so they will receive returns from the investment. The company acquires additional resources for investment. Customers, on the other hand, ensure that the firm continues to produce high quality and innovative products at a low cost. The feedback given by these stakeholders is important as it helps the company to make improvements in the products. Finally, the organizational stakeholders are the driving force behind the company’s growth. Providing employees with better service and increasing their knowledge and skills through training encourages them to perform better, hence the company grows faster.

 

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