Research, discuss and identify how ‘globalization’ impacts business today, and what international managers must know to stay ahead of the game. Identify and discuss how outsourcing and off shoring contribute to globalization using a company case study to identify the challenges, opportunities and problems that globalization presents.
Environmental change has taken place immensely in last few decades through globalisation of companies. The world has become a global community where organisations seek venturing beyond country boundaries for gaining business opportunities. Example of successful organisations dealing in global bushiness are McDonalds selling its food in more than 200 countries globally, Toyota Motors making cars in USA but selling all over the world and Apple Inc which is a US based company, off shoring its manufacturing units and selling products all over the globe(Kapoor, n.d.). This shows the effect globalisation has brought in which organisations does not limits the selling and manufacturing of products and services in home countries only. With outsourcing and off shoring they have been able to expand their businesses globally. Globalisation can also be defined as interconnectivity of firms, government and people of diversified countries to remain integrated through globalisation of business. In the process, both manufacturing and distribution along with sales are made by the companies across borders that links diversified countries through international trade and commerce. Enhanced transportation along with technology development has made globalisation procedure easier that proved to be difficult earlier (Okoye & Nwaigwe, 2015). Although globalisation has become a customary practice today, its impacts can be visualised in today’s business both positively as well as negatively. Globalisation allows international communication where communication between partners enables sound relationship between countries thereby making universe united with each other. On the other hand, companies exploiting other countries resources are few drawbacks that even reflectethical issues arising due to globalisation. However, globalisation has become an integral part of today’ businesses which will get more developed in coming years since its importance have been identified by today’s managers for which they consider globalisation in their businesses(Edwin & Okpara, 2015).
To stay ahead of the game, international mangers need to understand the effect globalisation can bring in their organisation and how they can manage it. Work responsibilities of global managers are getting more complex with the rise of technology and increased groups of diversified culture. Effective leaders prove effective due to managerial capabilities as team leaders who managediverse groups with strategic policies. For this they need to think about organisational issues from broader perspectives while focussing more on core objective behind organisation’s formation (Chuang, 2009). To guide people in cross cultural organisations, global managers prepares employees to get prepared for future challenges while focussing on present development. There are many qualities required to be present in international managers like nurturing human capabilities, increasing overall performances, taking responsibility of organisation as well as society and getting equipped with leadership quality to maintain cross culture people relationship. Gaining flexible relationship between employees and managers is very essential in today’s workplace. The competition and nature of globalisation has made tremendous transformation in human life and work culture (Bertrán, 2006). The technological innovations and demographic changes influence to bring rapid changes in work places for which global mangers needs to gain enhanced capabilities. To ensure global market competencies, development of trust and loyalty among employees and managers is very crucial so that organisational development and necessary change is taken to next level. Along with this, global managers also need to consider global business requirements so that gaining competitive advantage in global marketplace becomes easier for them (Cascio, 2012).
The global outsourcing and off shoring has been seen growing rapidly since last few decades. With the development of technologies and advanced business communication practice, the implementation of off shoring has become latest trend in international organisation. There are many evidences that show that despite of recession in countries, organisations had avoided decline in revenues with outsourcing business units in diversified countries. The trend has been logical in respect to growth in businesses since the basic behind technological development and sharing of marketplace has made growth in infrastructure of countries as well as organisations (Palugod & Palugod, 2011). As more clients become aware of outsourcing function, they identify advantages of outsourcing and hence become capable of transforming their business models to more concentrated business units. Outsourcing have not only made business hubs more profitable but also provided them with effective labour along with easy availability of desired resources. Government have also taken part in providing organisations with facilities to enhance their outsourcing and off shoring functions. But, at the same time they also monitor global companies so that infringement of country laws and regulations are avoided. International companies have adopted diversified cultural teams to make business practices more customised as well as effective (Gião et al., 2008). Today’s organisations follow systems in which human development along with adaptation of various cultured people has enabled globalisation process smoother than before and with outsourcing and off shoring activities, they realise successful global assignments.
To understand the topic and ways in which international organisations carry their globalisation process, this report will analyse Apple Inc case study to find potential challenges and opportunities observed by the company in outsourcing and off shoring its activities. Apple is an American based company whose headquarters is situated in California, US. Its stocks are listed in NASDAQ and New York stock exchange under the label of AAPL (Palugod & Palugod, 2011). Company deals in development and manufacturing of electronics goods like mobile phones, computers and software’s. Main hardware component manufactured by company are well known to entire nation like Iphone, Ipod and Macintosh. There are multiple varieties of software’s offered by company to its users that ranges from entertainment to operating systems along with education-based software’s. The company deals in more than 300 retail stores spread across 10 countries along with online business where its products are reached even to those customers situated in rural areas of different countries. Microsoft is the most reputed company in the world who is also a strong competitor of Apple. Apple has been able to surpass it under many fields by providing high tech products in more innovative manner. Since its establishment in the year 1976, Apple has been able to capture computer market and with identification of its growing reputation its founders decided to include other products also. Initially Apple was named as Apple Computer Inc and after few years, its founders under an agreement changed its name to Apple Inc for showing their expansion in other consumer oriented electronic products and software’s. Presently, the company employees more than 45,000 satisfied employees who work for the company on full time basis while 3,000 other employees of the firm are spread across the globe. Company’s globalisation and expansion strategies have made Apple achieve a distinctive market position regarding electronic industry. The unique marketing style and its loyalty towards customers across the globe have made it one of the most admired companies in the world (Froud et al., 2012).
Apple follows differentiation strategy by putting different elements in designing and development process. The company aims to provide service and products that have exclusive characteristics and thus enhances its marketing position. Apple’s success in global marketplace is because of its concentration in marketing research and finding innovative designs that suits its customers demand. With this reference, the company makes its business strategy by continuously building and advancing robust policy that attracts third parties. The company strategies also include expansion in distribution network to improve its global reach. For this Apple makes constant efforts in providing with new products and post-sale services to remain attached with customers. To enhance its production quantity and quality, Apple has integrated designing and manufacturing units in various countries like Singapore, China, Korea and Taiwan. By outsourcing manufacturing function, the company has been able to realise cost effectiveness and increased profiteering. However, outsourcing business functions have resulted in downsizing home country’s market along with getting increase in unemployment rate. Along with it, few ethical issues identified in outsourcing countries have also impacted Apple’s outsourcing business strategy in globalisation process (Sohail, n.d.).
Like many other global companies, Apple also faces many challenges in its globalisation process. Despite of being top electronics brand, competition faced by competitors like Samsung and Microsoft has always made Apple facing challenges in international market (Pinto-Cardoso, 2016). The aggressive competition has even resulted in reduced profit shares and in countries where there are multiple electronic brands, entrance of Apple become very difficult. Challenges related to changing demands of customers along with environmental changes have always impacted company’s sales where Apple needs to constantly work on its technological development sectors. With emergence of new companies, competitive market has even forced Apple to reduce its prices to match with them (Lak, 2017). Along with expansion strategies, Apple also makes innovative designs to sustain in global market for which it requires making constant changes in designing and modelling of its products. Moreover, few competitors of Apple even make equivalent products like Apple in lesser price (Edwin & Okpara, 2015). Few costly products manufactured in its outsourcing units provide products with much reduced cost that is further assembled in different countries. Due to outsourcing manufacturing division in different countries, US people claims that Apple does not considers providing employment to its country people and thus Apple comes under moral stance. Some of its manufacturing units in off shore countries have even troubled Apples name by carrying unethical practices in factory sites. Suicidal case at Foxconn unit is one of the examples where Apple had to suffer biggest ethical error. The Foxconn incident has hampered Apple’s name due to which Apple had to face severe loses along with reduced share prices in that year (Merchant, 2017). Even subcontractors appointed by Apple while outsourcing its supply chain in many countries have shown managerial errors due to which company had to realise challenges while doing business in those countries. Manufacturing defects and error in operating devices have also challenged the company many times due to which outsourcing manufacturing function has resulted in losing many customers. Other challenges faced by Apple in globalisation process are because of its rigid policies in company’s products. Apple products come with built in features that restrict users for installing other company’s software’s. These rules have made its customers frustrated and thus many potential buyers switch to other brand products
By focussing more on innovation and development, Apple has gain a formidable reputation among people globally. With its strategy of providing limited edition products have gained market monopoly where customers’ demands for exclusive and rare products. Apple is the leader of electronic goods and therefore has been able to capture international market with much ease. After sale services provided by the company has made its customers loyal towards it and Apple has become most accepted brand by people. Globalisation added more advantage to the company since sales of Apple products increased due to its strong product portfolio. The retail stores of Apple contain every variety of products related to computers and mobile phones and thus its customer’s experiences making choices according to their preference (Hovivian, 2017). With globalisation, Apple has been able to gain desired resources and talented people present across countries. With such resources and qualified staff, new innovations became easier for the company and Apple was able to develop its products according to the taste of people situated at distinct parts of the world. Apple’s outsourcing strategy was made to reduce costs of manufacturing of some of its costly products. Company outsources few of its components manufacturing in different countries where maximum reduction in manufacturing costs are realised. Even the supply chain management in diversified countries are managedafter collaborating with other agencies present over there. With outsourcing supply chain and distribution network, Apple’s growth in those regions becomes easier as local people supported company’s sales in those countries by enabling effective supply chain and logistics. Apple penetration in new countries is made after studying economies of those countries. Since Apple deals mainly in expensive products, it targets more on developed and developing countries where Apple can comprehend quick sales (Pineda, 2017).
Apple’s innovative designs have always been liked by people and therefore new market it enters has always shown positive support. Global market competitors are also identified by the company for which Apple identifies strengths and weaknesses of its competitor to give tough competition to them. Apple consists of efficient management and enhanced global team that always supports the company with sound managerial practice. This can be proved by identifying its franchise policy in foreign countries where Apple gives store authority to local people while product and pricing factors are kept under company hands. This strategy has made growth of Apple stores in global countries mush faster as local people assisted Apple in marketing its products over there. From the beginning, Apple has always considered in making social networking marketing strategies for which Apple has always remained in front of public eyes (Temple Media Institutions, n.d.). With gaining recognition of its brand, information about any new product launched by the company quickly spreads among people. By sharing products descriptions and designs, more people gets attracted towards buying its products and thus Apple realises quick response for new products. Company’s global reputation also depends largely due to its market presence and exploration of diversified marketplace worldwide. Due to enhanced outsourcing and off shorting activities in manufacturing and supply chain areas, government of those areas have also supported Apple’s business. Apple has always remained faithful towards countries laws and systems. Apple works on principle where all its dealing with clients and distributors are made after signing written documents which have also saved company many times from fraud agencies (Francis, n.d.). Therefore, it can be said that Apple has been able to realise global opportunities that has made its globalisation process more effective.
Although Apple is one of the leading brands present in today’s market, problems faced by it are also in substantial number. During Apple’s growth phase, it had to face many problems like Anti American, Anti internationalisation, Anti foreign brands by many countries. During globalisation process, one major problem faced by international companies is regarding management of cultural groups. Apple also faced similar problem where language and cultural barriers made growth process slower than anticipated (Edwin & Okpara, 2015). Also, governmental laws and regulations of different countries have made Apple’s core policies altered due to which Apple has to maintain separate set of rules for different regions. Dealing with clients is also a problematic area where outsourcing agents remains rigid in their policies (Tsukayama, 2012). In foreign countries, Apple requires to follow principles laid by people dealing with its product marketing over there. Under such situation Apple have face many problems while managing its core principle along with distributor’s demands. During globalisation process, companies face additional competition with local brands that restricts entrance of foreign brands. Similar problem is faced by Apple where during entry phase in few countries it was opposed by local people and they demanded to boycott foreign brands products. In few countries, where Apple products were rejected for such reasons, Apple decided to outsource few of its business functions so that people present there becomes favourable for buying its products (Madelynau, 2012). Apple’s rigid operating systems as mentioned earlier have also made it face issues where its competitors have been able to gain advantage over it. During the death of its CEO Steve Jobs, Apple had to face problems in maintaining customer interest in the company. Since Steve was admired greatly by people due to his innovative and fresh ideas, with his death people started believing that all the attraction in company’s products will be lost due to which Apple had to face severe market breakdown (Cramer, 2011).
Although Apple made strategic choice related to outsourcing manufacturing function, few of its manufacturing unit’s issues made entire organisation face serious troubles. Many of the Apple’s products were found to be defected which resulted in reduction of company’s sale because of outsourcing units. Third party suppliers and distributors also gave additional problems to the company by making unethical practice in their areas (Jackson, 2013). Country laws and licensing agreements have also made Apple face many issues since under those laws availability of few of its products became delayed. This delaying of resources made entire production process face halt and thus resulted in slow manufacturing than required.
Conclusion
Globalisation has made organisations involved in expanded forms of businesses due to which development of nations as well as human has been made possible in effective manner. Global communities nowadays are aware of advantages behind globalisation process and thus more companies are implementing globalisation in their work cultures. Impacts of globalisation are also a critical area that requires to be considered for which global managers are developing required skills for efficient globalisation process. In the above report, Apple’s case study has been identified which have helped in gaining knowledge about international company’s work processes and strategies. Global team and global managers represents global companies and thus requires gaining exclusive capacities to make globalisation process more operative towards future development. Globalisation not only promotes foreign investments but also integrates diversified countries businesses with each other and thus an initiation towards unitedness is formed.
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