Socio Economic and Legal Assessment of Apple

APPLE SOCIO-ECONOMIC AND LEGAL ASSESSMENT

Executive Summary

Apple Inc. is among the most significant corporate companies globally, listed among the top profitable firms. This results from the high-profit margins that the company makes annually from selling its products at a premium rate. It is also seen as a revolutionary company due to the various innovative products that it has launched over the years. The firm operates at a global scale and is perfect when demonstrating the aspect of globalization. Several socio-economic and legal factors affect the company’s operations and, to a large extent, act as the drivers of the company’s success. Among the most crucial is the flexibility of work and its changing nature since more people are now adopting remote working. This has brought about increased demand for Apple’s products. Middle-class populations are also growing in emerging economies like Ethiopia, China, and India. These countries have prominent people and are recording a higher economic growth rate than the developed economies. Privacy issues and consumer ethics issues are also crucial, and close attention should be paid to this since consumers want a guarantee of the safety of their information.

There are also legal and political factors affecting the company’s operations, including lawsuits based on the allegations of tax evasion, such as when the company was alleged to have moved its profits to Ireland to avoid paying taxes and anticompetitive behavior. The company is constantly facing lawsuits, which has a significant impact on its operations and reputation. Another legal issue that the company has faced is legal battles about intellectual property and product licensing. However, the future of the company still looks good and is expected to maintain high performance.

Apple Socio-economic and Legal Assessment Report

Introduction (Background Information)

When Apple first made its way into the technology market, it was not a disruptive brand or an industry innovator. It first made a market appearance as another high-priced computer manufacturer. The company made its first breakthrough in 2001, when the very first iPod was released into the market, a device that made people carry music everywhere with ease. Today, Apple Inc. has made a name for itself in the global technology arena, making it to the most valuable companies list in the entire world. This milestone has been achievable by gaining significantly large profits annually for the longest time consecutively. The company’s origin dates back to the 1980s when it was founded by Steve Jobs, who later left the firm to start his business and joined the company again. As mentioned earlier, the company initially specialized in computer production. The focus allowed the company to acquire a significant market share compared to the competitive brands, which mainly focused on the business world. Apple’s focus on their personal computers also enabled the company to put effort into innovative aspects of the hardware and software design and the interior; all purchased externally (Myers & Fellow, 2013).

The company’s innovation was seen in 2001 when the company introduced the iPod into the market. This was a well-designed and small device used for playing music with the capacity of carrying thousands of songs. The small size made it portable and could be moved anywhere with ease. The company’s innovation process also brought about the innovation of the Apple Music Store. With this, people were granted easy access to their music playlist. Moreover, musicians and music labels also benefitted when the company made the purchase process formal. These innovations played a significant role in placing the company at the top of electronic sales and designs, thereby gathering a large customer base.

The company further achieved a significant milestone in 2007, when it introduced its first Apple smartphone. This also facilitated the positioning of the company at the top and made it what it is today. This innovation by Apple changed the face of the telecommunication industry by making phones more than just about making calls. This was accompanied by the development of the industry, which specialized in developing the applications to be installed in these phones. This industry has significantly changed people’s lives around the world. Even though many competitive brands have evolved over the years, Apple Inc. has stayed relevant by its constant production of high-end and high-quality Apple products that have attracted the international market. The company is still top of the list as a high-end smartphone bestseller.

Just last year, 2020, amidst the pandemic, the company introduced their Apple CPU, an innovation also considered a significant revolution for its future since the company has produced an ARM-based chip usable for every function of the company computer. The added advantage of the chip is that it uses considerably less amount of energy. As a result, every computer that uses this chip processes different items faster while using significantly lesser power. This increases the computer’s battery life. All these innovations have placed the company on top of technological innovations in the telecommunication industry, manufacturing electronics that have played a significant role in the industry’s revolution.

Socio-economic Trends that Affect Apple’s Business Model

The most notable aspect is the increasingly changing nature of work coupled with increased flexibility of the same. Over the past few years, remote working or simply working away from the office setting has been on the rise and has been recently exacerbated by the COVID-19 pandemic that brought chaos along with it. As one of the instruments to reduce the risk of being infected or spreading the virus, office spaces and schools, among other areas, were closed, and people were forced to work from their homes. This has brought with it a rising need to have secure and best internet connectivity and computer technology. These aspects have combined with increasing the demand for laptops, computers, and other intelligent devices. As a result, such devices have been selling best and at a higher rate in different parts of the world. Mobile phones have also seen a rise in demand as many individuals worldwide seek to manage their work effectively despite the constant movement around the world. Convenience is something that consumers admire, and this has made the company record even more sales. A continued rise in this trend will bring even more opportunities to the company as more and more of its products are becoming increasingly useful for work and even school. Therefore, the sales will also grow (Strielkowski & Chigisheva, 2018).

Another socio-economic trend that is of considerable significance is the increasing middle-class population in various emerging markets. As the world continues to record technological advancement and economic growth, it is noteworthy that emerging economies are growing at a higher rate than the developed economies’ growth rate. These include Nigeria, Ethiopia, India, Vietnam, and China. These countries have large populations, and their economic growth continues to place them among larger markets for every consumer goods. As a consequence of this economic development, there has been an increased middle-class population in the mentioned countries, a condition directly increasing these countries’ purchasing power in terms of middle-class growth of the company, these countries becoming more profitable. This condition is likely to impact the company’s sales, which are likely to increase should this trend continue rising and determine its ability to maintain its position at the top in the future (Strielkowski & Chigisheva, 2018). Looking at the trends in these markets, one can only see a promising future for Apple since it shall earn more money from the sales.

Privacy issues and consumer ethics are another socio-economic aspect and are very significant as far as digital information is concerned. Computer use makes it easy to have a considerable amount of information about different individuals. The use of the internet and electronic devices further makes it possible and easy to access a large quantity of data concerning the internet users or the users of the devices. Some companies have attempted to commercialize this data to establish good marketing for their products and other services. As a result, privacy concerns are becoming on the rise within the industry. Internet and device users are constantly alert and keen to ensure that nobody gets access to their private information or interfere with their data. No individual or company misuses their information. When it comes to securing consumer rights and consumer ethics, Apple is on top of that list. The company stays committed to ensuring that consumer data is well safeguarded and not used for any malicious plot. This has been a significant determinant of its operations and a factor that impacts its future functions and performance. It also determines how attractive the brand will become to the consumers who cherish their privacy on various levels.

Literature Review

Various authors have come up with different literature reviews to explain the operations and business model of Apple Inc. Company. One of these is a journal article “Social, Economic, and Leadership for sustainable development of business and education in the future” by Chigisheva and Strielkowski. The authors have shed light on the businesses’ internal operations. Their analysis of various large companies, including Apple and Google, offers an insightful understanding of the role that social leadership plays in these companies to help them stay among the top most innovative tech companies, beating various potential competitors. The authors also identify economic leadership as a crucial element to be considered since it directly impacts the overall earnings that the company will have attained in the long run. Financial leadership is also essential when it comes to increasing the worth of any business at any particular time. These authors conclude that the success of any business is dependent on the firm’s leadership. As such, every company must have strong leadership that cuts across economic leadership and the societal aspects of leadership (Jamalova & Constantinovits, 2019). The analysis of these two authors and the information they provide is crucial in understanding the determining factors that have made Apple Inc. succeed today on social and economic aspects. The data is also essential to understanding how the company maximizes its strengths across various areas. As a result, it is necessary to understand the leaders’ and managers’ roles in the company and how this has helped keep the company on the right trajectory.

Moreover, the knowledge economy is a critical player in the global economy. A company’s ability to acquire and retain knowledge is a significant determinant of that company’s effectiveness. According to Smith and Turner (2015), Apple Inc. has been an effective operator in gaining and maintaining knowledge necessary to its operations running seamlessly. Through various efforts, it has also developed a system in which the apple consumers can quickly obtain the brand’s products that they need. The expectation and behavior of two generations, X and Y, are determinants of a company’s business model transformation. Smith and Turner, in their book, “The Millennial Survey,” analyses the role of the two generations in shaping a company’s business model and urges private organizations to embrace a societal business approach. This driver is critical to a business operation since it ensures appropriate analysis that provides a company with the idea of what it needs to pay attention to. If a crucial driver within an organization changes, then the business model must also vary accordingly. This analysis is essential to Apple Inc. since any organization from issues that can be avoided entirely allows it to focus on crucial issues (Smith &Turner, 2015).

According to Damian Tambini and Martin Moore in their book “Digital dominance: the power of Google, Amazon, Facebook, and Apple,” the abilities and the power that big companies have are directly correlated to their dominance in the market. They outline four giant companies, Apple, Google, Amazon, and Facebook. These four companies are technology-driven companies and the most prominent players within every segment that each operates. The authors write that the companies also have the most considerable consumer access in the United States market and other parts of the world. The two authors assess the mentioned companies’ ethical behavior regarding large quantities of consumer data and the companies’ control.

Additionally, they evaluate how these companies use the power they have over their consumer data or information against other competitive brands, significantly affecting their businesses. Their analysis provides a deeper understanding of the negative and positive aspects of large owning large companies and corporations, especially concerning the companies’ power and ethical behavior. The authors identify lack of social responsibility and unethical behavior or misconduct as crucial issues with significant outcomes on the whole business operation. These issues must be checked through a company’s legal amendments since this is responsible for regulating every company’s actions. This aspect also provides a better understanding of Apple Inc.’s company and how it has achieved a large and loyal consumer base.

Furthermore, Apple Inc. has had some major tax evasion allegations fired against it in various jurisdictions worldwide. The most noteworthy is one case where the company was alleged to have stored its money in Ireland, a country whose tax laws are relatively favorable. A company can keep its cash without necessarily paying taxes. Graham and O’Rourke’s journal, “Cooking a corporation tax controversy: Apple, Ireland, and EU.” Graham and O’Rourke explain how Apple’s business generates a massive revenue and has a large profit margin that makes its expenses relatively lower due to its global business nature. This practice by the company is called tax evasion, a legal issue that uncovers issues of corporate responsibilities in the different areas where the company operates. There are legal loopholes that have allowed the company to transfer its profits and revenues across several jurisdictions, an attempt of evading tax collection. This journal has information that enlightens one on the measures that can be taken to promote a company’s legal responsibility and increase the amount of tax collected by the government from different companies.

Moreover, Apple’s innovation is among the key strategies that have kept the company on top of the list in the telecommunication industry. As a result of this strategy, the demographics of individuals using its products are likely to increase considerably. People are increasingly adopting cashless payments in various places, making it easy to make payments even over long distances. The company was able to maximize this. Aside from the other innovative projects like the iPod and the Apple smartphone, the company has launched Apple Pay. Smith and Turner, in their book, write that the younger generation finds a product like this more appealing than the older generation. This app is mainly used by individuals below 40 years, while those more aged than 40 years prefer payment by cash. The authors further write that it will be prudent for the company to understand this demographic difference. It would help the company determine where to channel its marketing efforts to get the best returns. They add that this strategy leads to better results if different demographics are targeted by particular products, appealing to them. Additionally, it helps a firm to meet its specific customer needs. The company has also used the music store that is more appealing to the younger demographic, and this has helped the company retain this category of consumers.

A company’s technology also plays a crucial part in its success, significantly when narrowed down to product development. This phenomenon can be observed in the case of Apple. The company’s primary products are electronics, and it has been developing electronics since it was established, even so at a faster rate than its competitors. According to Smith and Turner (2015), the company has not lost its title as a leader in different operations areas because of innovation. It has always made sure to be at the forefront of introducing innovative technology like the smartphone and the iPod. Also key to note is that the company has exhibited the ability to quickly adapt to the technological advancements and changes introduced by other companies in the same industry to push Apple Inc. out of business. The ability to adapt is a critical aspect of the company’s growth and has allowed various developments and the company to become the leader.

Moreover, the company is committed to investing in Research and Development, a move that has always allowed the company to stay on top of the game as far as innovation is concerned. This has increased its reliability directly. The overall result is that the company has become very competitive with unbeatable strategies (Jamalova & Constantinovits, 2019).

Impact of the Legal Framework and Political Factors

Political factors

Political factors affecting Apple’s business model mainly present it with opportunities. Some of the external political factors that have suggested Apple with options include stable political affairs in developed countries with larger market shares. Another example is improved free trade policies in some of its market shares. Such factors present the company with more sales and gains in revenue, resulting in economic growth. Free trade policies are generally developed or created with time, increasing opportunities for the company to supply even more products worldwide. Political stability in the market of developed countries also presents an opportunity for the company to expand its operations and grow. Reduced political issues and problems are affecting the functions of a business present a chance for growth for any company. However, some political aspects present threats to Apple Inc.’s business operations, as described below. These include tax payments, disputes with the United States FBI, and trade disputes like that between China and the United States that is a potential threat to the company’s growth (Jamalova & Constantinovits, 2019).

Tax payment is a significant political aspect that affects the company. The company has been involved in practices such as keeping its revenue in offshore accounts such as Ireland to avoid paying income taxes to the United States government. This has led to several lawsuits against the multinational company. Changes in the tax policies and the government’s position and its agencies on the company, specifically the external political factors, have consequences for the business and its operations.

Dispute with the United States FBI is another critical political factor that affects the company. For instance, the company had battled with the FBI when it was demanded to hack one of their customer product, an iPhone used by a member of a terror group, the San Bernadino. The company was against it since it would mean going against their customer privacy terms, a move that attracted a lot of negativity from the public.

Long-term Implications of Political Factors on Apple Inc.

The company has faced numerous changes arising from the political arena that has forced it to adapt to the market and industry as driven by such modifications. The political environment within which Apple Inc. operates is dynamic and constantly changing. Some of the political factors that influence Apple’s operations have presented business opportunities that the company has taken advantage of to secure an increased share of both the remote and the global markets. Such factors include free trade policies and stability in the political arena of developed countries, where the company has larger shares of the market and a vast customer base. Some political aspects also pose threats to the company’s operations, including battles with government agencies like the FBI and tax evasion dramas and conflicts like the ongoing conflict between the United States and China. It, therefore, becomes crucial for the company to analyze some of such potential threats and address them accordingly and in advance to avoid issues that may arise and affect the operations negatively. Profit maximization is the main goal in the long run. As a result, the company should develop various strategies to maximize the opportunities presented by multiple political drivers. The company is also forced to generate ideas on management methods and practical strategies to solve conflicts that may arise within the business. Apple Inc. has a solid strategic position that has enabled it to beat the challenges and obstacles it has faced so far to become the giant company it is today.

Legal systems and Anti-Trust Laws and their Impact on Apple Inc

The external legal factors that affect the company’s operations pose threats to the company’s business model. The pressure by the government concerning privacy terms in this digital era has brought about increased privacy regulations on companies like Apple. This is a threat that has the potential of imposing expensive regulatory- compliance requirements on the company. However, this provides the company an opportunity to boost its operations by enhancing privacy measures. The company has also faced numerous lawsuits against it on tax evasion and legal battles about intellectual property and product licensing. For instance, Australia, the United States, the European Union, and other countries have strongly criticized the company concerning its repair services on third parties policies. Consequently, the firm must focus on regulatory compliance and privacy protection in every brand product. It must also consider adjusting its practices and policies to address the legal pressures it is currently facing.

Conclusions and Recommendations

Having considered all the socio-economic and legal, and political factors that drive the business model of Apple Inc., it is apparent that the company is robust and competent enough to overcome the challenges it faces against its operations as well as to beat competition from other brands. The multibillion-dollar company has a rigid business model built to bring about positive influences and change the face of the telecommunication industry and the tech world. Currently, the company is at the top of the global market because of its high-end and high-quality products; the company is forced to make enormous efforts to gain more consumers and retain the existing consumers. Competition in the industry is becoming increasingly high, especially with the renewal of technology. The company’s business model is translated into a well-educated and talented workforce, financial abilities, technological abilities, a prevalent distribution network, and other physical resources that help to facilitate the implementation of any growth strategies that are put in place. This allows for fueling the company’s revenue every year despite losing a small portion of the global market.