Apple, Inc. as a Multinational Corporation: Strategy and Management

9818 words (39 pages) Business Assignment

27th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsSWOTFinanceMarketingManagementInternal AnalysisExternal AnalysisBusinessLiterature ReviewAppleMarket AnalysisBusiness StrategyFoxconn

Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our Business Assignment Writing Service. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of BusinessTeacher.org.

Abstract

This paper attempts to review what Multinational Corporations’ roles and reputation. It will also attempt to review how they survive in the competitive world of all the Multinational Corporations out there. Apple, Inc. is an example of a Multinational Corporations and this paper will discuss the background and the strategies that Apple, Inc. to be able call themselves as one of the most successful company out there. In this paper, there will be a discussion on how Apple, Inc. adapts being one of the most successful Multinational Corporations out there. Next, in this paper, there will be discussions about the implications for management. Lastly, there will be recommendations that Apple, Inc. should take so that they can continue to be a successful corporation.

Introduction

Apple, Inc. is a multinational corporation that started out with Steve Jobs. He and his friend, Steve Wozniak, were high school drop outs (MarketLine Company Profile: Apple Inc., 2019). They started Apple in Steve Job’s basement (MarketLine Company Profile: Apple Inc., 2019). They created the first Apple computer in April of 1976 (MarketLine Company Profile: Apple Inc., 2019). They introduced the 2nd computer which brought sales from 35,000 computers in 1979 to 78,000 computers in 1980. In 1980, the company had 1,000 employees and they went public. In the early 1990s they created the Macintosh which was extremely successful. There was a power struggle among the executives, so Steve Jobs left the company along with other executive. In 1997, Steve Jobs came back to the company as an advisor and then shortly after he became the CEO and introduced iMac. Ever since Steve Jobs came back, the company did very well.

Multinational Corporations, or otherwise known as MNCs, are huge industrial organizations that have multiple subsidiaries and facilities in multiple countries (Chen, 2018). The subsidiaries that are in multiple countries are run by a parent company. Multinational Corporations play a very important role in with economics for undeveloped countries (Chen, 2018). Multinational Corporations advance from outsourcing their parts for their products to low wage countries which keep producing cost low and achieve bigger profit margins (Boersma & Clarke, 2018).Multinational Corporations become successful by adopting  economic, political, and other factors in the respect of host countries (Sageder and Feldbauer-Durstmuller, 2018). Multinational Corporations have the responsibility to preserve their integrity of their value chain. They need to make sure they don’t have any unresolved human rights, environmental and ethical dilemmas.

Hypotheses

In the review of literature, I will begin to explain what a Multinational Corporations is and how they face a more intense competence and higher number of changes in the different countries that operate. Then I will continue to talk about Multinational Corporations’ roles and reputation. Next, I will talk about management control and how Multinational Corporations survive in today’s competitive world.  Executing management is crucial for Multinational Corporations. Next, I will talk about the sustainability of Apple, Inc. as a Multinational Corporations. Lastly, I will talk about the human rights, ethical and environmental dilemmas that occurred within Apple, Inc.  In the research findings, I will talk about the discussion of the disadvantages and advantages of Multinational Corporations.

Apple Inc. is an example of a Multinational Corporations. Apple Inc. is one of the most well-known Multinational Corporations in the world. They are one of the richest of the entire Multinational Corporations. They are a great example to use to explain how Multinational Corporations work. First, I will talk about their missions and values and how they implement it all in their business strategies. Using Apple Inc., we can then determine Multinational Corporations corporate social responsibility for actions by its suppliers.  Then I will discuss the SWOT analysis for Apple, Inc. I will then talk about Apple’s marketing strategy and how they make their company as successful as they are today. Apple, Inc. uses several different marketing and generic strategies for their business plan. I will analyze Apple’s financial situation. In the end, I will talk about the implications for managers that are used to motivate employees to achieve organizational effectiveness. Lastly, I will give Apple, Inc. recommendations that they can use to improve their business and become more successful.

Review of Literature

Apple as Multinational Corporations

Both Popsecu and Chen discussed in their article about what Multinational Corporations are and their roles. They both used qualitative data to find their research. Chen defined Multinational Corporations or otherwise known as MNCs, as huge industrial organizations that have multiple subsidiaries and facilities in multiple countries (Chen, 2018).

The subsidiaries that are in multiple countries are run by a parent company. For example, Apple has multiple subsidiaries in different countries. Their parent company (headquarters) is in Cupertino, California (Chen, 2018). Multinational Corporations usually get into joint ventures with other companies in other countries (Chen, 2018). In these joint ventures, MNCs make agreements regarding the production, the market, etc.

He concluded that Multinational Corporations play a very important role in with economics for undeveloped countries (Chen, 2018). Popescu mentioned that Apple play an important role of the governance of international environment matters (Popescu, 2016).  MNCs also play an important role for host countries because of the domestic labor. The domestic labor can bring about higher wages and have benefits for consumers by offering lower prices and better quality. The investments will create a more domestic investment (Chen, 2018).

Sageder and Feldbauer-Durstmuller about MNCs need successful by adopting o economic, political, and other factors in the respect of host countries (2018). They will have to fight through the geographical and culture divided so that it will be more easily manageable (Sageder & Feldbauer- Durstmüller, 2018). In order to do so, management control needs to come into play.

According to Segeder and Feldbauer- Durstmüller, management control (MC) is the systems, rules, practices and values that influence employee behavior, decisions, and actions (2018). MNCs need to have diverse mechanism, such as, planning, standard procedures, and training to control their subsidiaries that are in other countries. (Sageder, et al., 2018).

Using qualitative data, they concluded that MNCs have high complexity and they need to use MC to help them in making decisions that can greatly affect a company. Using MC can help a company find the internal activities that encourage employee behavior to predefined target (Sageder, et al., 2018).

Tseng uses his article to talk about internationalization in MNCs. MNCs have a high degree of internationalization (Tseng, 2018). A high degree of internationalization means that a company is to create goals and to evaluate performances (Tseng, 2018). Overall, it is concluded that Multinational Corporations can use management control to adapt to the environment and culture of the subsidiaries in different countries.

Hansen and Gwozdz mentions about the factors that affect Multinational Corporations and what makes them succeed in developing countries. Using qualitative data and the observation research method, there is a need for frequent communication in order to develop relationships (Hansen & Gwozdz, 2015). Therefore, other factors that can influence MNCs are location, economic development and growth, environment, and administrative of the foreign subsidiaries (Hansen & Gwozdz, 2015). Therefore, Hansen and Gwozdz concluded that MNCs need to fulfill these factors in order to be successful.

Apple, Inc. is one of the most well-known Multinational Corporations in the world. They are one of the richest of the entire industry of Multinational Corporations (Bereznoy, 2017).  In 2015, they became one of the world’s most value brands by reaching the first United States Corporation in history to get to $700 billion in market capitalization. This is twice more than Google and Microsoft combined (Bereznoy, 2017).

Apple products are very advanced and elegant in design (Bereznoy, 2017).  They were known to be “lifestyle transforming” (Bereznoy, 2017).  Apple has had steady competitive advantage over their competitors with their design and marketing (Bereznoy, 2017).  They did so well in their marketing campaigns that when a new Apple product is being marketed, people got so excited of the announcements and stood in line for every product that is launched. This shows brand loyalty lies well with Apple Inc. Overall, Bereznoy concluded that Apple’s customers are very faithful to them.

Sustainability

Brown talked about the effective protection of workers’ health and safety in global supply chains. Using qualitative data, he mentions that protecting workers’ health and safety has become a big problem especially in countries where governments don’t have the political will or resources (Brown, 2015).  Asia is a good example of country that does not protect their workers and sacrifice safety and health for foreign investment (Brown, 2015).

Apple is the most dominated company in the consumer electronic supply chain (Aguilera-Caracuel, Guerrero-Villegas & García-Sánchez, 2017).   They have created a closed ecosystem where they control different parts of the supply chains such as design and retail (Aguilera-Caracuel, et al., 2017).  Their combination of increasing gross revenues and maintaining their high gross profit margin for each of their product that they launch, they are getting big amounts of cash, They continue to be the best in the electronics component supply chain (Aguilera-Caracuel, et al., 2017).  This control of operations of business activities is defined as supply chain management. Value chain is about the full range of activities which are crucial to take a product or service through the whole entire process (Aguilera-Caracuel, et al., 2017).

Sustainable management of supply chains is the accomplishment of an organization’s social, environmental, and economic goals of the business process to progress long-term economic performance of corporations and their supply chains (Aguilera-Caracuel, et al., 2017).  Their supply chain plays a role in protecting workers’ health and safety. There has been a shift on concentrating on the issues relating to labor and workplace issues, which included low wages, working conditions and labor practices (Aguilera-Caracuel, et al., 2017).  Apple has had to handle the governance gap in global operations and to shut down this gap, code of conducts is essential to be made. Even though codes of conduct can advance the performance of the supply chain, it can cause companies to do unethical issues to meet the expectations (Aguilera-Caracuel, et al., 2017).

Multinational Corporations depends on corporate social responsibility (CSR) in supply chains and depends on the pressure of stakeholders. Stakeholders can really affect the success of an organization’s objectives (Aguilera-Caracuel, et al., 2017).  Multinational Corporations should try to develop their image positively and impact the corporate social reputation. By doing this, Multinational Corporations can grow their long-term performance. Overall, Aguilera-Caracuel, Guerrero-Villegas & García-Sánchez concluded how Multinational Corporations can advanced by reporting through corporate reputation to their stakeholders and other parties using information about their social and environmental responsibility in their supply chain. However, there are concerns that Multinational Corporations are more focused on making profits rather than focusing on their employees and communities (Aguilera-Caracuel, et al., 2017).

Human rights, Environmental and Ethical Dilemmas

Boersma and Clarke talks about human rights, environmental and ethical dilemmas in the Apple supply chain. They used observational research method and had qualitative data. They mentioned that since Apple is one of the biggest, most successful market leaders, they have the responsibility to preserve their integrity of their value chain. However, Apple had unresolved human rights, environmental and ethical dilemmas in China. Their products were produced by suffering of young workers in electronic sweatshops in China (Boersman, et al., 2015).

Multinational Corporations advance from outsourcing their parts for their products to low wage countries which keep producing cost low and achieve bigger profit margins (Boersma, et. al., 2018).  Apple is one of the common Multinational Corporations that outsource their parts. Most of their products come from Asia. Apple has 785 suppliers in total in over 31 counties worldwide. 349 of the 785 suppliers are in Asia (Boersma, et al., 2015). Without China, Apple would not be as successful as they are today because they have cheap labor and create quick profits.

Apple’s brand has never been expressed as ethical or sustainable. They never called themselves social and environmental responsible and are known to be as reactive (Boersma, et al., 2015).  Their values have been built using organizational legitimacy and their values been created to configure with the stakeholders (Boersma, et al., 2015). Multinational Corporations are likely to show governance gaps and weaknesses (Boersma, et al., 2015). In Apple’s case, these weaknesses included the existing Chinese labor laws and nonexistence of enforcement to give protection for workers. Apple has tried to fill this gap with independent audits and investigations (Boersma, et al., 2015). Consumers are still not aware of this process because the sales of Apple were unaffected even with the controversies. (Boersma, et al., 2015). Apple does not experience consumer pressure at all. The configuration that exists with stakeholder pressures has not stopped the human rights and employment rights that Apple’s supply chain from occurring (Boersma, et al., 2015).  Apple’s biggest concern is to approve their legitimacy with their consumers of their products (Boersma, et al., 2015). Luckily for Apple, their legitimacy is not a threat with their consumers.

Ryanget talks about the human rights abuses that Apple committed. Since Apple has high demands of their products, suppliers seem to find a way to cut corners in order to make a greater profit margin (Ryangert, 2018). This means they create lower wage for workers and have an unsafe production facility (Ryangert, 2018).

Due to technological advances, the products at Apple are more expensive to make. Apple pays toward to the cost of producing these products in exchange for rights to output which a discounted rate (Ryangert, 2018). This gives Apple the advantage of having access of more new advanced components before their competitors. Even when competitors do get access to those advanced components that Apple already has, Apple still negotiates to receive it at a lower cost due to the discounted rate (Ryangert, 2018). Therefore, Apple has become a monopsony which means the one buyer who can control the market (Ryangert, 2018).

The workers in this type of situation receive little to no protection of the government because independent trade unions and labor strikes are not allowed in China (Ryangert, 2018). There have been audits to uncover the working conditions in these facilities but these operations are in line with China’s formal regulations created by Chinese authorities (Ryangert, 2018).

Ryanget used qualitative data and concluded how China’s labor law gives their workers insufficient protection. China has every right to alter their laws but with the global economy, the Chinese government is hesitant of having stricter labor and wage regulation because it will decline their economy (Ryangert, 2018).

In the article “Apple bans chemical as opposition bites,” it talks about how Apple has been known for their bad reputation for their environmental policy. Gupta and Signh also talks about how Apple struggled with their environmental policy. Both articles used qualitative data and had research information from NGO and Greenpeace. There was a campaign from Greenpeace in 2006 to control consumer power, so that has made it more challenging for Apple to be more clearer about their environmental policies (“Apple bans chemicals as opposition bites,” 2014). This campaign has caused Apple to get rid of their most harmful chemicals in their product which ranges from Brominated Fire Retardants (BFRs) and Polyvinyl Chloride (PVC) (“Apple bans chemicals as opposition bites,” 2014). NGO has constantly criticized Apple for not having a more sustainable approach because they have used toxic materials in their production process and they lack of recycling and waste (“Apple bans chemicals as opposition bites,” 2014). In 2012, Greenpeace pressured Apple even more to pledge to renewable energy so their power would exclusively come from renewable sources (“Apple bans chemicals as opposition bites,” 2014).

During protests and strikes, Apple was pressured by Chinese workers to get rid the chemical poison of hexyl hydride which is known to be a narcotic by the US Environmental Protection Agency (Gupta & Signh, 2014). This chemical can hurt the central nervous system and create vertigo and muscular atrophy. Apple said that they stopped using this chemical when the found out was making their workers ill (Gupta & Signh, 2014). To react to this whole situation, Apple put in in $850 million in solar power. They mandate and require environmental areas which include hazardous, substance management, and environmental permits and reporting (Gupta & Signh, 2014).

Pun, Shen, Guo, Lym Chan and Selden takes the topic further by including the issues with Foxconn with qualitative data. The research they used was the news sources. In 2012, they were exposed that the assembly workers at Foxconn (which is one of Apple’s largest supplier) was making $1.78 an hour (Pun, Shen, Guo, Lym Chan & Selden, 2016). Even though stuff like this happens, Apple still opposes that its business model is more than about a profit. They debate that they formed an ethical production model. Apple is in the position to refresh the current supply chain and to turn into a better example for everyone else. Foxconn is a contractor for many Multinational Corporations (Pun, et. al., 2016). Foxconn, unlike Apple, has decreased profit margin. However, they are well sourced (Pun, et. al., 2016).

Apple has been under fire about sourcing components from producers that have poor reputation (employment conditions and practices) since 2006 (Pun, et. al., 2016).  The assembly line workers were only making $50 a month while working 15 hours a day (Pun, et. al., 2016). Workers said it was like being in the army, they made them stand for hours and if they moved, they were punished (Pun, et. al., 2016).  After being exposed of this, Apple was undergoing a public relations nightmare. They were being linked to the horrible workplace conditions. In 2010, south of China formed mass strikes and protects for increased wages and for working conditions to be better (Pun, et. al., 2016). It was known that some of these workers were committing suicide due to the working conditions and the low wages (Pun, et. al., 2016).

There was an explosion at Foxconn in 2011 which caused three deaths and many injuries. There was also another explosion that caused the death of 61 workers at Pegatron which is another supplier of Apple (Pun, et. al., 2016). Both suppliers said that they were not keeping up with the maintenance and cleanliness of the factories and that has caused both explosions (Pun, et. al., 2016). After these explosions, the media researched even deeper to find out more about these suppliers and it was found that 86 labor rights was violated at Pegatron (Pun, et. al., 2016). Some of these violations included: women’s right violations, underage labor, poor working conditions, low wages, long working hours, etc. (Pun, et. al., 2016). Apple has started a supplier responsibility after this and this is when they created their Supplier Code of Conduct (Pun, et. al., 2016).  They have published a supplier responsibility report annually so that their audit findings are public (Pun, et. al., 2016).  If there were violations found against the Code of Conduct, then Apple gave their suppliers 90 days to fix the violation (Pun, et. al., 2016).  If the violation is not fixed, then the relationship with Apple is terminated. It was found that Foxconn violated some code of conducts in 2006 (Pun, et. al., 2016). Foxconn swore to make the changes to comply with Apple’s Supplier Code of Conduct (Pun, et. al., 2016). From 2005 to present, Apple has taken it serious by reporting and taking action on anything that has violated their supplier code of conduct. Apple hired independent auditor to investigate the production facilities. According to Apple, the audit was very thorough to avoid what happened in the past to happen again.

Research Findings

Apple’s Background

Apple, Inc. started out with Steve Jobs. He and his friend, Steve Wozniak, were high school drop outs (MarketLine Company Profile: Apple Inc., 2019). Despite them dropping out of high school, they both had very innovative and intelligent minds. They started Apple in Steve Job’s basement (MarketLine Company Profile: Apple Inc., 2019). They created the first Apple computer in April of 1976 (MarketLine Company Profile: Apple Inc., 2019). It is the perfect example of how a dream became a reality. Ron Wayne soon joined their team; however, he left the company (MarketLine Company Profile: Apple Inc., 2019). They introduced the 2nd computer which brought sales from 35,000 computers in 1979 to 78,000 computers in 1980. In 1980, the company had 1,000 employees and they went public (MarketLine Company Profile: Apple Inc., 2019).  In the early 1990s they created the Macintosh which was extremely successful (MarketLine Company Profile: Apple Inc., 2019). There was a power struggle among the executives, so Steve Jobs left the company along with other executive (MarketLine Company Profile: Apple Inc., 2019). In 1997, Steve Jobs came back to the company as an advisor and then shortly after he became the CEO and introduced iMac (MarketLine Company Profile: Apple Inc., 2019). Ever since Steve Jobs came back, the company did very well. Jobs kept introducing one innovative product after another.  Apple is most known for the products that they design and manufactures. They also are known for their software, their services, their accessories, and their applications (Apple, Inc., 2018). They sell these products and services all over the world through retail stores and online stores through consumers, businesses, and government, enterprise and education customers (Apple, Inc., 2018).  They also sell their products and services through direct sales force with third-part cellular network carriers, wholesales, resellers, and retailers (Apple, Inc., 2018).

Apple, Inc.’s Mission & Vision

Apple’s mission statement talks about how they design all their products like the Macs which are the best personal computers in the world (Apple, Inc., 2018). It also talks about how they lead the digital music revolution with their iPods and iTunes. Apple stated in their mission statement about how they reinvented the mobile phone and the future of mobile media (Apple, Inc., 2018). Their visions included that they believe that they on are on this earth make great products and how they are constantly focusing on innovating (Apple, Inc., 2018). They believe in simple, but they don’t believe in complex (Apple, Inc., 2018). Their vision stated they don’t believe in making a bunch of products, rather than just a few so that can truly focus on making the most out of those few products (Apple, Inc., 2018).

Supplier Code of Conduct

In Apple’s Supplier Code of Conduct, it states that they are required to give safe working conditions and treat their workers with respect (Apple, Inc., 2018).  It also states that they act ethically and be environmentally responsible. It also states that if a supplier violates this conduct they will terminate the relationship with Apple (Apple, Inc., 2018). Since Apple has high demands of their products, suppliers seem to find a way to cut corners in order to make a greater profit margin. This means they create lower wage for workers and have an unsafe production facilities (Pun, et. al., 2016). The technology is more advanced today, so they are more expensive to make. Apple pays toward to the cost of producing these products in exchange for rights to output which a discounted rate (Pun, et. al., 2016). This gives Apple the advantage of having access of more new advanced components before their competitors. Even when competitors do gain access to those advanced components that Apple already has; Apple still gets it at a lower cost due the negotiation of the discounted rate (Pun, et. al., 2016). Therefore, Apple has become a monopsony which means the one buyer who can control the market.

The workers in this type of situation receive little to no protection of the government because independent trade unions and labor strikes are not allowed in China (Pun, et. al., 2016). There have been audits to uncover the working conditions in these facilities, but these operations are in line with China’s formal regulations created by Chinese authorities (Pun, et. al., 2016). Apple and the EMS companies have decided to pledge to make changes so that they can comply with China’s labor laws. China’s labor law gives their workers inadequate protection (Pun, et. al., 2016). China has every right to change their laws but with the global economy, the Chinese government is apprehensive about having stricter labor and wage regulation because it will weaken their economy (Pun, et. al., 2016). As the global supply chains have become longer, consumers have no more influence on where the product they buy comes from and how they are made. However, there’s a big chance that a lot of the Apple consumers do not know about the circumstances of how their product is being made (Pun, et. al., 2016).

Apple’s Supplier Code of Conduct mentions that suppliers must support the human rights of workers and treat them with dignity and respect as understood by the internal community. They believe in antidiscrimination and fair treatment. They believe in prevention of underage labor, in juvenile worker protections, reasonable working hours, and fair wages and benefits (Apple, Inc., 2018). Apple thinks that having complete health and safety management practices into all aspects of business is important to have high morale and make innovative products (Apple, Inc., 2018). They intend to have a safe working condition and healthy work environment for all of their workers. They believe in occupational injury prevention, in preventing chemical exposure, and in emergency prevention, preparedness, and response. They also believe in occupational safety procedures and system and ergonomics (Apple, Inc., 2018). Apple considers environmental factors as an integral part of their business practices. They want to reduce the environmental impact of their designs, manufacturing processes, and waste emissions. They believe in hazardous substance management and restrictions, in solid waste management, air emissions management, environmental permits and reporting, and pollution prevention and resource reduction (Apple, Inc., 2018). Apple wants to be committed of the highest standards of ethical conduct when dealing with workers, suppliers, and customers. They believe in business integrity, disclosure of information, whistleblower protection, and protection of intellectual property. Apple’s company statement should be posted in all languages and in all locations (Apple, Inc., 2018).

Marketing Strategy

Apple has one of the highest brand equities in the world. Apple marketing strategy is based on Steve Job’s philosophy that customers do not always know what they want. They focus on installing innovative features and capabilities in their products, so it makes customers to want Apple products (Apple, Inc., 2018).  For Apple’s marketing strategy, they rely on two different strategies: product placement with celebrities and popular shows and positive reviews in the media (Apple, Inc., 2018).  Apple has a unique value proposition. This gives Apple and their market share a competitive advantage. Apple does not see their competitors as competitors. They know their customers are willing to pay a high price for their products because they know that they are getting their money’s worth (Apple, Inc., 2018).  Apple keeps their products simple. Their advertising and promotions are successful when there is a new product launch which creates hype for their customers. Apple includes a full analysis in their reports (Apple, Inc., 2018).  Some of the major analytical strategic frameworks of business studies like SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, etc. (Devi & Jyothsna, 2015). The report also includes discussions of Apple business strategy, ecosystem and addresses issues of corporate social responsibility. Apple believes that they need continual investment in research and development in order to be successful.

Generic Strategy

Apple’s generic strategy is differentiation because they stand out in the market. They have a unique design and are user-friendly. They also have high-end branding and differentiate from other technological products. Apple always set itself from their competitors by their prices and competitive advantages. Their products are designed for everyone and are supported by a broad market reach (Apple. Inc., 2018).

Other Strategies

Apple emphasizes their retail strategy. They have over 300 stores in 11 countries. 87 of those stores are not in the United States (Apple, Inc., 2018). Using their retail stores, they can have face-to-face interaction with their customers. They encourage their customers to give feedback on their service and they use the feedback to improve their strategies (Apple, Inc., 2018). They also use protective strategy. They try to play it safer by really focusing on releasing products that are similar but more advanced. This strategy can be risky because they can lose their customers’ interest of having the same thing every single time. Apple uses blue ocean strategy and they continue to be the market most successful innovator (Apple, Inc., 2018). Apple continuously creates new products and they do so very quickly. Using the blue ocean strategy, they can create a new market and a new demand. Tim Cook balances between maintaining their most successful products/services and creating demand (Apple, Inc., 2018).

Apple, Inc.’s General Environment

There are a lot of factors associated with the general environment of a company which includes technological segment, demographical segment, and socio-cultural segment (Apple, Inc., 2018). In the technological segment, technology is the main key factor of the success of Apple. Their technological segment increases each year (Apple, Inc., 2018).  The demographic segment is also a main key to the company’s success (Apple, Inc., 2018).  The United States population is increasing each year. The world’s population is also growing quickly. They need to use the demographic segment to figure out which parts of the whole world is using their products the most and what ages is using their products (Apple, Inc., 2018).  The socio-cultural segment is important because culture is a key factor of a company’s success (Apple, Inc., 2018).  They need comply with different cultures and be successful in foreign countries (Apple, Inc., 2018).

Apple, Inc.’s Industry

Apple has been a leader in their industry.  They always take their products to the next level compared to their competitors (Apple, Inc., 2018). In the industries that Apple, Inc. is in, the key factor is technology (Apple, Inc., 2018).  Technological innovation gives Apple, Inc. a competitive advantage (Apple, Inc., 2018). Companies in these industries that Apple is in have to use innovation and introduce new products often because of the competition (Apple, Inc., 2018). This is why it is important to invest in research and development. The products in this industry can be shorter (Apple, Inc., 2018).  Price is one the most important aspect to analyze the strategic group in the industry that Apple is in (Apple, Inc., 2018). Apple creates high end products and sets premium prices (Apple, Inc., 2018).  They provide both digital and physical assets. This is why Apple is the most successful company in their industry (Apple, Inc., 2018).

The Target Market/Customers

The primary focuses for Apple are the people who are in the middle- and upper-class income because these demographics are usually willing to pay extra for a better user experience.” It mostly appeals to people of all ages and not just the 18 to 34-year-old demographic that seems most popular in the industry that Apple is in (Apple, Inc., 2018). Apple also targets music enthusiasts and professionals that work in media and design (Apple, Inc., 2018).

Apple’s main target market is city dwellers and young people, therefore human rights and labor practices would seem to be extremely important (Pun, et. al., 2018). But there is no consumer boycott or even awareness of what is happening with Apple’s supply chain. Multinational Corporations are well rehearsed of making themselves look socially responsible. They are well rehearsed of making their brand look appealing and hushing critic (Pun, et. al., 2018).

SWOT Analysis

One of Apple, Inc. biggest strength is that they have a big variety of products. They have products like Mac, iPhone, iPod, Apple Watch, Apple TV, iPad, and many more (Apple, Inc., 2018). These products are cash cows (“Apple Inc. SWOT Analysis). They are continuing to develop new products. Another strength that they have is that they have a strong brand image (“Apple Inc. SWOT Analysis). Everyone knows who Apple is. They have many loyal customers. They are one of the most successful companies in the history (“Apple Inc. SWOT Analysis). Their product designs are unique which makes people want to buy their products even more. Although they have strength, they also have some weaknesses. Their products can be pricey and more expensive their competitors. Their product line is very narrow (“Apple Inc. SWOT Analysis). They have a niche customer target (“Apple Inc. SWOT Analysis). They target higher class customers and not the lower/middle customers (“Apple Inc. SWOT Analysis). Apple can take some opportunities. They can start doing globalization (“Apple Inc. SWOT Analysis). Apple can develop more technological accessories and gadgets (“Apple Inc. SWOT Analysis).  They can put more investment in their research and development (“Apple Inc. SWOT Analysis). They can make their product lines broader by using product diversification strategy (“Apple Inc. SWOT Analysis).  Apple also has some threats. One of their biggest threats is that they have a lot of competition when it comes to their products and these competitors are offering their products lower than Apple’s prices (“Apple Inc. SWOT Analysis). Some of their competitors include Google, Microsoft, HP, and Amazon (“Apple Inc. SWOT Analysis).

Financial Analysis

Apple posted on their website of the financial results for the fiscal 2019 second quarter ended March 30, 2019. They posted quarterly revenue of $58 million (Apple, Inc., 2018).  This is decreased from the previous quarter 2018. Their quarterly earnings per diluted shares were $2.56 which decreased by 10 percent (Apple, Inc., 2018).   Their net sales for products in 2018 were $51,287,000 and $46,565,000 in 2019 (Apple, Inc., 2018).   Net sales for Apple rose by 16% in 2018 because of the sales of the iPhone (Apple, Inc., 2018).  Europe net sales rose during 2018 compared to 2017 (Apple, Inc., 2018). Their international sales accounted for 61 percent of this quarter’s total revenue (Apple, Inc., 2018).  In Europe, their net sales were $13,054,000 and $13,846,000 in 2018 which there was a decrease in their sales (Apple, Inc., 2018).   Their services were $11,450,000 in 2019 and $9,850,000 in 2018 and this shows that their services are productive (Apple, Inc., 2018).  In May 2018, the new capital return program is $100 billion and they improved their quarterly dividend from $0.63 to $0.73 per share (Apple, Inc., 2018).

Their operating cash flow was $11.2 billion. The cash dividend was $0.77 of the company’s common stock which rose by 5 percent (Apple, Inc., 2018).  Their gross margin was $21,821,000 in 2019 and $23,422,000 in 2018. (Apple, Inc., 2018).  They invested $3,948,000 in research and development for 2019 so far (Apple, Inc., 2018).  Their iPad has made great sales from 2018 ($4,008,000) to 2019 ($4,872,000) (Apple, Inc., 2018).  Overall, their financial position is going well and if they continue to sell iPhones like they have been, then they will be consistent (Apple, Inc., 2018).

Table 1:

Important Numbers
(In millions, except number of shares which are reflected in thousands and par value) 3/31/2018 3/31/2017
Total Cost of Sales  36,194.00  37,715.00
Gross Margin  21,821.00  23,422.00
Total Operating Expenses  8,406.00  7,528.00
Net Income  11,561.00  13,822.00
EPS Diluted  2.46  2.73
Total Net Sales  58,015.00  61,137.00
Total Assets
Cash and cash equivalents  37,988.00  25,913.00
Marketable securities  42,104.00  40,388.00
Accounts receivable, net  15,085.00  23,186.00
Inventories  4,884.00  3,956.00
Total current assets  123,346.00  131,339.00
Total non-current assets  218,652.00  234,386.00
Total assets  341,998.00  365,725.00
Current liabilities:
Accounts payable  30,443.00  55,888.00
Other current liabilities  35,368.00  33,327.00
Total current liabilities  93,772.00  115,929.00
Total non-current liabilities  142,366.00  142,649.00
Total liabilities  236,138.00  258,578.00
Shareholders’ equity:
Retained earnings  64,558.00  70,400.00
Total shareholders’ equity  105,860.00  107,147.00
Total liabilities and shareholders’ equity  341,998.00  365,725.00

(Source: Apple, Inc. (2018). Annual report 2018. Retrieved from https://investor.apple.com/investor-relations/default.aspx)

Table 2:

Ratios 3/31/2018 3/31/2017
Gross Profit Rate = Gross Profit ÷ Net Sales 0.38 0.38
Return on Sales = Net Income ÷ Net Sales 0.20 0.23
Return on Assets = Net Income ÷ Average Total Assets 0.03 0.04
Return on Stockholders’ Equity = Net Income ÷ Average Stockholders’ Equity 0.11 0.13
Current Ratio = Current Assets ÷ Current Liabilities 1.32 1.13
Cash Ratio = ( Cash + Marketable Securities ) ÷ Current Liabilities 0.85 0.57
Net Working Capital = Current Assets – Current Liabilities 29574.00 15410.00
Receivable Turnover = Net Credit Sales ÷ Average Accounts Receivable 3.85 2.64
Days Sales Outstanding = 360 Days ÷ Receivable Turnover 93.61 136.53
Total Asset Turnover = Net Sales ÷ Average Total Assets 0.17 0.17
Debt Ratio = Total Liabilities ÷ Total Assets 0.69 0.71
Equity Ratio = Total Equity ÷ Total Assets 0.31 0.29
Debt-Equity Ratio = Total Liabilities ÷ Total Equity 2.23 2.41

(Source: Apple, Inc. (2018). Annual report 2018. Retrieved from https://investor.apple.com/investor-relations/default.asp)

Managerial Implications

Managers in multinational corporations have to take matters to keep their company successful. They have to find venture with emerging economics and the strategies that are beyond their control. They have to create new strategies and organizational cultures while dealing with other foreign cultures and governments (Aguilera-Caracuel, et al., 2017).

The emerging markets can difficult to deal with but it gives multinational corporations profit and growth opportunities. It can be totally unpredictable. Therefore, managers will need to find implications that can help them through this difficult process (Aguilera-Caracuel, et al., 2017).

Implication of management helps gives managers the opportunity to motivate their employees to be the best they can possibly be. Other factors of implication of management are ethical focus, trust, rewards and shared information. Apple’s Implication for management has changed from Steve Jobs to Tim Cooke. They established an organization culture which has been the key factor of the continuing success of Apple (Aguilera-Caracuel, et al., 2017).

Apple has experienced changes in the executive team especially after the death of Steve Jobs. This is when they introduced Tim Cook as the new CEO (Apple, Inc., 2018). He was previously the COO and was responsible for the sales and operations worldwide. He was responsible for “Apple’s supply chain, sales activities, and service and support in all market” (Apple, Inc., 2018).

Since there have been changes in the management team, they had to think new strategies and a new culture of Apple, Inc. They will need to make changes to their organization culture and make sure everyone understands the organizational culture so that they can continue to run Apple, Inc. efficiently (Aguilera-Caracuel, et al., 2017).

Organizational culture creates and maintains the business philosophy, values, beliefs and behavior of employees. Their philosophy, values, beliefs and behavior of employees are all aligned with the drive for innovation. Innovation is Apple, Inc.’s biggest competitive advantage.  They operate to fulfill the mission and vision statements (Aguilera-Caracuel, et al., 2017).

Organizational culture is a key factor of any company’s success. Companies, especially Multinational Corporations, need to take it seriously if they want their company to succeed. Apple, Inc. does have a good organizational culture and could be a great example of what other Multinational Corporations should follow (Aguilera-Caracuel, et al., 2017).

They have a competitive advantage against other companies; however, the competition imposes strong external forces that influence their strategic management.  To compete against these competitors, the managers have to enforce the cultural traits that are necessary to get them to be successful. Some traits include top-notch excellence, creativity, innovation, secrecy and moderate combativeness. They have to be better than their competition so they will need to do all that they can do to make sure of that (Aguilera-Caracuel, et al., 2017).

The managers have a policy of only hiring the best of the best. Steve Jobs was known to fire people who did not meet their expectations. Time Cook continues this tradition. This promotes top-notch excellence and gives employees the motivation and expectations of how they should be (Apple, Inc., 2018).

The managers encourage creativity in order to get new ideas and to help improve their business and products. Overall, managers are an essential part of company’s success and being a manager can be hard work. Apple, Inc. picked a great person to manage Apple, Inc. after Steve Jobs passed away.

Innovation is another important factor for the implication of managers. The managers want to motivate their employees in term of their work performance and their contribution to the company’s success. Innovation just makes sure the company continues to grow, to become profitable, and to attract their target customers (Aguilera-Caracuel, et al., 2017).

Innovation is so important to have when there is such a competitive world in the technology world. There are so many competitions in this industry that in order to stand out, Apple, Inc. will need to be innovative. Doing this can cause people to choose them over their competitors and create a loyal customer fan base (Aguilera-Caracuel, et al., 2017).

Steve Jobs was big on creating an organization culture of secrecy. This prevents the theft of proprietary information or intellectual property so that their competitors don’t take away their ideas. Employees are encourages to keep the company’s information within the company. Steve Jobs created a combative approach to leadership. He was known to challenge his employees randomly to make sure they have what it takes to work at Apple (Apple, Inc., 2018). This enhances the motivation of employees to give it their best at all time.

Overall, being managers in multinational corporations can be tricky. They have to take matters to keep their company successful. They have to create new strategies and organizational cultures while dealing with other foreign cultures and governments. Implication of management helps gives managers the opportunity to motivate their employees to be the best they can possibly be. Apple, Inc. need to continue to have a successful organizational culture that can be efficient. They need to make sure they continue to adapt to the foreign subsidiaries’ culture, rules, law and regulation.

Recommendations

Even though Apple is one of the most well-known companies in the world and it seems like they are doing everything correctly, they have flaws that they could change to make them even a more successful company. No company is perfect and every company should always be thinking about ways to improve their company.

There is more competition today more than ever and Apple, Inc. cannot just keep their strategies the same. They will have to change their strategy so that they can still stay ahead in the industry. These recommendations should be applied to their strategy so that they can keep their position in the market and in the competitive industry.

One of the biggest recommendations that Apple, Inc. should implement is that they should keep their loyal customers by emphasizing their customer service and enhancing the customer experience. In order to do this, Apple, Inc. needs to invest in different factors like training their employees to know how to maintain good customer service, building a better system for their customers, and having more efficient policies for their customers. They also need to decrease their prices. Their competitors are beating them out when it comes to price. If they keep their loyal fan base, they can still sell their phones as much as they have, they should lower the prices so that their fan base will grow even more.

They need to make sure that they maintain their reputation of having high quality services and products. That is the main reason why a majority of consumers in the industry that Apple, Inc. is chooses Apple, Inc. over their competitors. Even though it can be expensive, the customers are comfortable buying it because they know it is high quality. Therefore, Apple, Inc. should take more control on their quality management and their delivery time. Innovation is a key factor for Apple, Inc. Apple, Inc. needs to continue to preserve their innovative culture for their business strategy.

Another recommendation for Apple, Inc. is to create and invent more products that have both hardware and software that can meet core standards like high security, compatible system, and effective working condition. Apple, Inc. has struggled when it came to revaluing the top leadership. They need to make sure that they re-value their top leadership often so stuff that has happened in the past will not happen again. They need to do this to avoid the top executives’ strategy from failing. The CEO needs to promote the organizational culture more. Their organizational structure is currently power culture. Power culture has too many disadvantages and too many risks. If they transition to task culture, they can have an increased level of freedom and more flexibility for their employees. They can also have more room for innovation.

Apple’s generic strategy gives them a big competitive advantage against their competition. However, to keep this competitive advantage up, they must penetrate markets. They need to apply this in developing countries where they have limited market for technology good and services. To improve their product development, they do need to penetrate the market. This can increase their resilience against other competitors such as Google or Samsung. They can continuously improve their broad differentiation generic strategy to enhance their competitive advantage and become a better, successful company.

One of Apple’s policies is that their employees have to be able to keep a secret. Their secrecy doesn’t give them a competitive advantage. Their competitors know what Apple is working on even before it launched. Even when it was launched, it took the competitors a long time to create a similar competing device. By the time that the competitors created a similar product, Apple was already creating a new version of that same product or a newer type of product.

Leadership is extremely important in Multinational Corporations. Multinational Corporations can be complicated because a leader would deal with multiple foreign subsidiaries that have different cultures and rules. Tim Cook is the leader for Apple, Inc. and he needs to figure out the strategies that works best for Apple, Inc. After he figure out the best strategy, he will need to initiate it and make sure his employees follow it. He needs to be innovative when it comes to the strategies he comes up with and he also needs be innovative when implementing the strategy. Recommendation of making sure Tim Cook is a good leader will help Apple, Inc. continue being one of the most successful and well-known Multinational Corporation in the world.

Overall, it is important for companies, especially Multinational Corporations, to take recommendations seriously. Apple, Inc. is one of the most well-known and successful Multinational Corporation out there. They still have to continue to make innovative ideas and sufficient decisions in order to keep their status of that.

Taking these recommendations can take them to a whole new level and continue having a competitive advantage over their competitors. No company is perfect and every company should always be thinking about ways to improve their company. There is more competition today more than ever and Apple, Inc. cannot just keep their strategies the same. They will have to change their strategy so that they can still stay ahead in the industry.

References

  • Aguilera-Caracuel, J., Guerrero-Villegas, J., & García-Sánchez, E. (2017). Reputation of multinational companies: Corporate social responsibility and internationalization. European Journal of Management and Business Economics, 26(3), 329-346. doi:http://dx.doi.org/10.1108/EJMBE-10-2017-019
  • Apple bans chemicals as opposition bites. (2014). TCE: The Chemical Engineer, (879), 8. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,sso&db=a9h&AN=98496802&site=eds-live
  • Apple Inc. SWOT Analysis. (2019). Apple Inc. SWOT Analysis, 1–8. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,sso&db=buh&AN=136377098&site=eds-live
  • Apple, Inc. (2018). Annual report 2018. Retrieved from https://investor.apple.com/investor-relations/default.aspx
  • Bereznoy, A. (2017). Corporate foresight in multinational business strategies. Foresight and STI Governance, 11(1), 9-22. doi:http://dx.doi.org/10.17323/2500-2597.2017.1.9.22
  • Brown, G. D. (2015). Effective protection of workers’ health and safety in global supply chains. International Journal of Labour Research, 7(1), 35-53,3-4. Retrieved from https://search.proquest.com/docview/1774151534?accountid=28870
  • Chen, S. (2018). Multinational corporate power, influence and responsibility in global supply chains: JBE. Journal of Business Ethics, 148(2), 365-374. doi:http://dx.doi.org/10.1007/s10551-016-3033-x
  • Clarke, T., & Boersma, M. (2017). The governance of global value chains: Unresolved human rights, environmental and ethical dilemmas in the apple supply chain: JBE. Journal of Business Ethics, 143(1), 111-131. doi:http://dx.doi.org/10.1007/s10551-015-2781-3
  • Hansen, M. W., & Gwozdz, W. (2015). What makes MNCs succeed in developing countries?: An empirical analysis of subsidiary performance. Multinational Business Review, 23(3), 224-247. Retrieved from https://search.proquest.com/docview/1710914000?accountid=28870
  • Jyothsna, M., & Devi, V. R. (2015). Marketing products and services in a dynamic environment. Prestige International Journal of Management and Research, 7/8(2), 46-51. Retrieved from https://search.proquest.com/docview/1774569131?accountid=28870
  • MarketLine Company Profile: Apple Inc. (2019). Apple Inc. MarketLine Company Profile (pp. 1–86). Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,sso&db=buh&AN=136363959&site=eds-live
  • Popescu, G. H. (2016). The role of Multinational Corporations in global environmental politics. Economics, Management and Financial Markets, 11(3), 72-78. Retrieved from https://search.proquest.com/docview/1826415823?accountid=28870
  • Pun, N., Shen, Y., Guo, Y., Lu, H., Chan, J., & Selden, M. (2016). Apple, Foxconn, and Chinese workers’ struggles from a global labor perspective. Inter-Asia Cultural Studies, 17(2), 166–185. https://doi.org/10.1080/14649373.2016.1170961
  • Rasul, T. (2018). Relationship marketing’s important in modern corporate culture. The Journal of Developing Areas, 52(1), 261-268. Retrieved from https://search.proquest.com/docview/1960279252?accountid=28870
  • Ryngaert, C. (2018). Accountability of Multinational Corporations for human rights abuses. Utrecht Law Review, (Issue 2), 1. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,sso&db=edshol&AN=edshol.hein.journals.utrecht14.10&site=eds-live
  • Sageder, M., & Feldbauer-Durstmüller, B. (2018). Management control in multinational companies: A systematic literature review. Review of Managerial Science, 1-44. doi:http://dx.doi.org/10.1007/s11846-018-0276-1
  • Singh, S. C., & Gupta, D. (2014). Green supply chain & profitability: A case study of two multinational companies. Journal of Supply Chain Management Systems, 3(3), 6-11. Retrieved from https://search.proquest.com/docview/1733231046?accountid=28870
  • Tseng, C. (2015). Determinants of MNC’s knowledge inflows to subsidiaries: A perspective on internalization advantages. Management International Review, 55(1), 119-150. doi:http://dx.doi.org/10.1007/s11575-014-0230-7

Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this assignment and no longer wish to have your work published on the UKDiss.com website then please: