Globalization

1. Globalization By: Esteban Lombardi Federico Casanova Brian Havas

2. Defining Globalization & Impact on Society Globalizationis the closer integration of countries and peoples of the world which has been brought about by the enormous reductions of costs of transport and communications and the breaking down of artificial barriers (protectionism (tariffs to foreign imports)) to the flow of goods, services, capital, knowledge and to a lesser extent. Globalization has begun on the 1970`s after the cold war, but on the last 15 years it has increased rapidly and to a large extent, on a period of strong economic growth. The indicators that the society is Globalized, are that People relied more on the market economy, had more faith in private capital and resources, international organizations started playing a vital role in the development of developing countries. The internet plays a fundamental role, since people are much more connected, and buy and sell through it instantly. It could be one of the most fundamental tools in Globalization and it’s process.

3. Factors Affecting Globalization Global Trade Organizations A few trade agreements such as the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA) had helped to the spread of globalization. The most common barrier to globalization are Tariffs which are kind of taxes imposed on imported goods and sometimes exported goods. Technological innovation Technological innovation influenced in globalization as it provides developments in means of communications, transportation and data processing had produced denser, faster, more reliable and much cheaper global links. Global relations really depends on good technology to improve global connections. Market based economies and Capitalism  Global market offer prospects of increased profit through higher sales. Higher production is needed to feed global markets, but businesses are able to take advantage from economies of scale. Capitalism also follows globalization as private companies are willing to expand as much as possible and higher their profits.

4. How does globalization affects Apple? Markets and Distribution The customer segments of the company are divided into various categories. The needs of the main customers markets it caters are of small and medium businesses, education sectors, large corporations, government departments and other related markets. In order to meet the needs and wants of these consumer markets, the company is utilizing direct and indirect distribution channels including online sales services, retail stores and direct sales force as well as third party sellers, retailers etc. Using direct sales contacts with the customers is, believed by the company, leveraging its product sales and has demonstrated as an advantage to the company over its competitors. In order to maximize its sales and to make sure that the buyers are receiving high quality experience, the company is in a process to expand and improve its existing channel distribution network Competition Globalization implies that the company faces aggressive competition from the other market players. The needs of the markets it caters are highly competitive in nature due to the ever changing and advancing technological environment and the rapid introduction of new technology based products. The main competitors of the company are following cost leadership strategies by reducing the prices of their products or by maintaining low profit margins to maintain their market share. There are various forces that can impact the business and profitability of Apple. These factors may include the marketing mix – product, price, place, promotion strategies, product performance, the quality and reliability of the product, innovative designs as well as the availability of up to date software services. Currently, the management of the company is focusing on the expansion of its business markets related to the smart phones and other media and communication devices. Therefore, it is expected that the competition in these markets will tend to increase for the company. Moreover, some of the competitors of the company have number of resources which they can utilize against the company to provide the product and service offerings related to Apple at little or no margin and, worst for the company, can collaborate with one another to offer the business and consumer products and services similar to Apple’s products at low price range. Products and Services Apple is currently using in house manufacturing system for the production of all of its products. All the products like Mac, iphone, ipad and ipod etc. are designed, developed and marketed via its main manufacturing hub which is located in the USA. But, as mentioned earlier, the company is outsourcing the production of some of its product parts to the various international and national supply chain partners; subcontractorsThe 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. For instance, the company offered a customized deal on the black Friday event last year for its customer base in the United States. This specific deal was expanded for the European countries. This event was in the mid of the year in the United States while in the European countries it was in the November. This globalized offering increased the sales of company products not only in the US markets but also in the European markets. Outsourcing Plants It 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 and launch the products in its markets of America, Asia and Europe. It produces its products, for example ipads, in the Shanghai, China which has given it a cost saving advantage and lead to the increased profitability for the company). But on the other hand, this outsourcing has increased the downsizing and unemployment rate in the home country. As these outsourcing plants contribute to the success of the company in the global markets but these also have some issues linked with the manufacturing of its products. Some of the outsourcing plants managed by the company are showing troubled situations for Apple. Early this year, the company has released its supplier responsibility report in which it has specified the unethical practices performed by its suppliers. One of its suppliers had employed over forty minors at the outsourcing units. Moreover, the suicide cases at Foxcon plant and the waste release issue at one of its “Wintek touch screen facility” has badly affected the company operations and its global image. The global manufacturers like Apple, Dell etc. and various others are vulnerable to the practices performed by its subcontractors. These unethical practices are accounted on behalf of the company and therefore have created problems and hindrances for the company in the global markets. The company was recently alleged for paying very low monthly wages (almost $50 per month) for a 15 hour work shift. The company responded to these allegations that "Apple is committed to ensuring that working conditions in our supply chain are safe, workers are treated with respect and dignity, and manufacturing processes are environmentally responsible," said a written statement from Apple spokesman Steve Dowling.

5. Bibliography • https://sites.google.com/a/sanandres.esc.edu.ar/economics/business-organisation (AAA Learning) • http://business.mapsofindia.com/globalization/impact.html • http://www.oxbridgewriters.com/essays/education/factors-affecting-globalization.php • http://www.publishyourarticles.org/knowledge-hub/business-studies/what-are-the-impact-of-globalization-and-liberalization-on-business-and-industry.html • http://es.scribd.com/doc/61951649/Impact-of-Globalization-on-Apple-Inc