Apple\'s Finance and Globalization

Apple (Mac) Finances and Globalization

Apple's goal is not making money, claims Sir Jonathan Ive - Apple's head of design. For a mega company that is worth a reported $539 billion, this might pass as a frivolous statement and Ive admits this. However, he asserts that his sentiments are true and factual. Ive clarifies that their goal is producing excellent products. These statements were made at the British Embassy's Creative Summit and were reported by The Telegraph. He stated that in being successful at this goal, consumers like the products Apple produces and when the company operates efficiently then revenue will definitely follow.

What happened in a courtroom in California does however negate these statements as Apple has engaged Samsung in several patent law suits in a number of countries the world over. In one such case against Samsung tablets and smart phones, Apple claims that Samsung products are blindly copied -- showing no originality -- from iPad's and iPhone's designs. Furthermore, Apple claims that these patent violations cost Apple in excess of five hundred million dollars in company profits and total damages of $2.525 Billion.

Through its smart-phone brands, Apple has captured the international market. The revolutionary iPhone transformed the global cell phones industry. The international market accounts for at least 60% of Apple's sales. This huge success is due to its edgy marketing practices as well as its worldwide distribution strategies. What draws consumers to Apple's iPhone is its innovativeness, inventive designs and usability. To market the iPhone to a trend conscious youthful demographic, Apple has positioned the iPhone as trendy, cool and hip, which has appealed to this trend-conscious cosmopolitan demographic.

Rational for Selection

Most people understand that Microsoft outplayed Apple Inc. In the PC game and barely understand that with the creation of the groundbreaking iPod and the iPhone, Apple started curving its own path. Apple's impeccable support to its clients is the epitome of customer care and service in the competitive tech world. Any person who has set foot in any Apple store will attest to this. Besides the customer service, what gives Apple an edge in the marketplace and makes it so hugely successful remain unknown to several people. Many authors have fronted Apple's business model or the genius of Steve Jobs as the key ingredients of Apples success but I advance that, after keeping an eye on Apple for years now, that what makes this company so successful is the business practices that make competing with it a nightmare. Apple's unmatched innovation plus rapid rate of development have earned the company some attention. Apples products range from the Mac computers, the iPhone, the Apple TV device, the iPad tablet computer to the iPod. Apple has also developed not less than 850,000 unique Apps (Apple Inc.2013), user friendly operating systems (OS X and iOS) and two online shops - the Apple App Store and the iTunes Music Store). For some years now, many academics have tried to focus on Apple as an area of concentration (Temple Media Institutions, n.d.). By analyzing globalization as well as Apple's financing, I would like to evaluate how and why Apple has managed to become one very successful institution.

On the closing of 2009, Steve Jobs was named as CEO of the decade by Fortune Magazine. His business methods were noted and appreciated whilst implementing them in different spheres. Steve Jobs as a CEO was both dynamic and critical at times. His leadership style was commendable, albeit prone to some criticism. Fortune magazine termed him as the one of the biggest egomaniacs of the Silicon Valley (Apple Inc.: The Steve Jobs Effect, 2012). Apple Inc. is popular for its unique innovation and mind-boggling development rate.

Apple was awarded the No#1 corporation title in The Wired 40 list of top corporations around the world. Certain factors were constant in its technological repute across the industry such as:

Overall product

Overall service

Overall value (charges and fees combined)

Company's reputation

Customer support / service (Sahoo, 2012)

Apple Inc. signifies revolutionizing personal computing as well as digital media distribution. Corporation takes in consideration development, design and distribution while releasing its products (www.Hoovers.com). Amongst Apple's portfolio consists of a broad array of products such as:

Portable and desktop computers released for educational and consumer purposes

Smart phones (iPhone)

Internet music library (iTunes)

Portable music players (iPod)

Applications boost productivity and user convenience (Mallin & Finkle, 2011).

Analysis of the two elements

Previously, what was used as a yardstick for the American economy was the automobile. Then came the family homes and with it the construction industry. Currently, anything produced by apple has become that very yardstick. Understanding how this whole concept works will help you understand how jobs and money are being redistributed the world over by globalization and technology. An important facet of the much lauded "American dream" has always been the idea of an ambitious entrepreneur who turns his idea from something abstract to a corporation which in turn produces jobs for the population. Steve Jobs and Apple were often looked upon as prime examples of the "American dream" (Mamorish, 2013).

Interestingly, the jobs produced by Apple overseas far outweigh the number produced here at home. Consider for example in 2006, that's quite some time back, Apple's employees abroad were twice the number at home. Philippines can count at least 4750 jobs Apple created and due to its population size, was relatively a large beneficiary of Apple's production. All is not lost for America though considering that annual salaries to the tune of $750 m remain in the U.S. And just 320 million dollars get channeled abroad. While many products made by Apple transit through China, there exists very small value added financially in China thus most of the money gets to Apple in the U.S. And not much remain in China. People will still question Apple's business ways mainly because of its sheer size and an inclination to overseas employment. What is important is that those questioned business practices still earn lots of dollars for Americans. This, however, creates an interesting scenario when evaluating the advantages and disadvantages for the company (Mamorish, 2013).

Apple Inc. is noted for its innovative design, development and competent marketing of media devices, portable music player devices and personal computers. Apart from that, the mega billionaire corporation sells host of:

Third party softwares

Third party apps

Peripherals

Networking solutions

Software services (Apple Inc. SWOT Analysis, 2012).

Globalization "involves number of continuing connected processes, including the globalization of trade and finance p.326," says Croteau, Hoynes and Millan (2011). The advancement of globalization has aided Apple to increase its profits. In contrast to the early years when the car was the benchmark for the American economy, today's economy has seen an emergence of a structure that has aided the technology marketplace to rise to the number one spot. This was partially aided by Steve Jobs (The New York Times 2011). Apple has seen massive success in the global marketplace by utilizing and capitalizing on importing and exporting (Lo, 2008). In July 2013, Apple had 417 retail stores spanning 13 countries plus a successful online store used in thirty eight nations with merchandise sales of $16 billion in 2011. Apple has indeed seen the importance of globalization after spreading its wings the world over (Temple Media institutions, n.d).

Apple's revenue has grown at an impressive 14.73% to an equally impressive $98.115 billion in quarter one and two of the 2013 financial year (Leitao, 2013). The graph shows how widespread the contributions to Apple's revenue are. The graph represents the portions of revenue brought in by Apple's regional revenue segments (Leitao, 2003). America contributed only 35% of Apple's revenue meaning that Apple revenue heavily depended upon overseas markets' performance. Furthermore, Apple has been excellent at taking advantage of opportunities overseas. For instance, an agreement to distribute the iPhone between China mobile which happens to be biggest mobile operator with subscribers numbering in the 740 million has been in the works for at least six years (DeWitt, 2013). The agreement will see them in collaboration with the iPhone5C. Apple has however worked with other players in the industry namely China Telecom and China Unicom for many years. Cooperation with China Mobile will see Apple's revenue grow much more rapidly and help it get an edge in the global marketplace. (Temple Media institutions, n.d).

Before Steve Jobs returned to Apple Corporation in 1997, Apple was in total loss for a few years going from bad to worse. Within three years of Steve Job's return, Apple's profits started to rise. The brand value of Apple started soaring upwards with his return to the company at the opportune time. With the inception of iPod in 2001, Apple was at the forefront of technological advancement, which paved way for ever evolving iPhone and iPads. Soon enough, Apple was the market leader in innovation. According to Brandz Top 100 Global Brands, Apple was at the top of the list in 2011, coming from 29th position in 2006. Hence, the market capitalization of Apple was possible due to Steve Job's prized contribution (Apple Inc.: The Steve Jobs Effect, 2012)

Moreover, culture globalization has seen a phenomenon where people form a fetish for Apple products. A growing number of consumers consider it classy and trendy to have Apple products. They have given more significance than is necessary for Apple products to an extent that some people are willing to sell their organs so as to be able to afford these products. Brand effect has resulted in consumers pursuing products even with unjustified prices. Occasionally, Apple took to restricting purchases during a launch and this will result in people being willing to spend even double or thrice the recommended price. This fetishism shows Apple's significance around the globe (Temple Media institutions, n.d).

Application of Organizational Design Theory

Organizational theory isn't a group of facts. Rather, it is a perception about institutions and organizations and the way individuals and/or resources are utilized so as to achieve specific objectives collectively. It is a method of studying organizations more meticulously and keenly than someone would under different circumstances. How one perceives any organization is grounded on regularities and patterns in organizational behavior and design (Daft, 2013).

Apple's backbone is innovation of products. In a way, this is how the company operates. Apple has the impressive capability to come up with new innovative products. Usability and elegance in design has always been a focus for differentiation. This capability to continue innovating and improve on the existing products is due to Apple's organizational structure as well as culture and controls. Contrary to institutions of similar size, there exists a practical and working structure at Apple. Reporting to the existing CEO are the senior vice president of operations, internet software services, hardware engineering, software engineering and worldwide marketing, plus the CFO and company general council. The company's operations are guarded in secrecy. Information, whether that which flows inside the organization or that is channeled to people outside, is heavily guarded. Employees remain unaware of unreleased products being developed and are often clue less about what other employees in other departments are doing. Sharing information with any unauthorized person, whether an outsider or another Apple employee, can lead to termination. Employees are made aware of this on joining Apple. These measures are aimed at ensuring that no information leaks till the day Apple does a launch. Competition thus finds no time to make any response and media critics find no opportunities to discredit any products under development (Hill et al., 2014).