Popularity of IPhone in Society Nowadays
Apple has changed the way people function on a daily basis and carry out their business. They have intricate and detailed technology with a simple, elegant, and easy to understand interface that allows users to quickly adapt to any Apple product. Apple’s unique and sleek design has made itself not only a brand but a social status for the public. Apple sees itself as not only a technology and consumer electronics company but also a fashion company. Apple has created a standard for other companies to follow, many companies try to inspire their new products using Apple’s but nothing has come close to the execution,technology, and simplistic sleek design that Apple has created.
The company was started because the two founders- Steve Jobs and Steve Wozniak wanted a computer that was user friendly. Both Jobs and Wozniak were college dropouts, so they worked on the company from Job’s home garage. Since Jobs used to work in the summers picking apples, they thought naming the company “Apple” would be a name that is fun, spirited, and unintimidating, little did they know that they would create one of the largest most intimidating companies in the world. Apple started off building computers, they built the first ever color graphics in around 1978, and then branched off to creating other products after Apple went public in 1980.
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In the late 1990s, Apple Inc became extremely popular. Apple sold approximately 33.8 million iPhones, 4.6 million Macs, and 14.2 million iPads. This is what caused Apple to initially globalize (TechCrunch). Apple’s journey with globalization started with making consumers a user friendly computer that is significantly cheaper. This made it easy for all households to have a computer. Using Apple’s technology, the world became more connected, different people from all parts of the world were able to connect and communicate. Apple changed the game with iTunes, letting people purchase and store music instantly. This caused Apple’s popularity to boom and lead to a need for faster production and manufacturing. They knew they needed help from foreign countries to get cheap, efficient, labor to help them mass produce.
When you turn over any Apple device, it says these words “Designed by Apple in California (Academia.edu). Assembled in China”. November 30,2003 , Apple opens up its first store outside the United States. While they had seventy three of stores all throughout the United States, they opened their seventy fourth retail store in Tokyo, Japan in the trendy Ginza shopping district. Many companies hesitate when growing outside the United States, they don’t know if they will be able to make the same profit and sales or compete with the local brands that other countries have.
Though, Apple cracked this problem when they decided to grow internationally- don’t make your customers adapt, you have to adapt to them. They transcend their messaging and content based on where the customer is located. They know what the customer needs based on language, geography, or culture. After Apple opened up all its retail stores all over the world including most in Europe and Asia, it took them over ten quarters to become profitable. By 2015, their second quarter report showed that 69% of Apple’s revenue was from outside the United States.
Apple is continuing to grow internationally because of the rising number in sales. They make sure they make a one-size fits all model so that their phones can sell well internationally. While they allow different apps and tiny changed functionality, they make sure that the user friendly approach that people everywhere can use and understand. In 2014, the Apple iPhones were available in 115 countries. That became the largest iPhone rollout in Apple’s history. Apple uses a one size fits all strategy for their products but the strategy helps them grow in so many countries because there is little customization possible. They only allow personalization in their technical and local requirements.
The biggest effects of globalization with Apple is shown during the iPod era’s first rollout (2001). Apple’s main globalization happened when they decided to produce their products in China. Apple has heavy relied on foreign outsourcing in order to produce the iPod. Apple employees double the amount of outside of the United States to produce the iPod. The numbers are as followed: 13,920 workers in the US and 27,250 abroad (12,270 Chinese workers, 4,750 Filipino workers). Though, American workers earned a sum of 750 million dollars while overseas workers took home a sum of 320 million dollars. This caused Apple and all its shareholders great benefit from globalization.
When Apple started created many products and software they grew all around California, from Elk Grove to Fremont to Cupertino, then went to Texas. Soon, they realized outsourcing would be cheaper, this caused them to open a plant in Singapore in 1981 to manufacture circuit boards. Over the years, Apple realized that it was not easy nor affordable to manufacture in the United States, so in 2004, after shutting down the last manufacturing line in Elk Grove, they started and continued all manufacturing in China.
When asked why they chose to do all their manufacturing in China, Jennifer Rigoni, Apple’s world supply manager responds “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”. She continues to add that while cheap and willing labor was a beneficial factor to this decision of outsourcing, production speed, flexibility, and supply chain management were bigger incentives in doing so.
They calculated what would happen if they did manufacture in the United States, they estimated that the work would take about nine months in the United States while it takes two weeks in China. Though, these aren’t the only reasons that benefit Apple. Apple saves a lot of money in taxes by having their manufacturing and stores abroad. According to a Fortune article, Apple holds around $252 billion in profits offshore! That is makes up approximately 90% of the company’s total amount of cash. That helps them avoid paying United States taxes.
Globalization has caused Apple to become a multinational operation. One of the main reasons that companies choose to manufacture overseas is to reduce cost while increasing and speeding up production and efficiency. When Apple wanted to launch the iphone, they. were able to contract 250,000 people to work on producing the new phone within a couple days notice. In order to make sure they don’t delay production they make sure that they pay premium minimum wage. Apple’s main reason to produce in other countries is to reduce costs and also increase revenue. The company’s high profits allows it to produce the products at a low price and sell them for a high price. Apple also released that its products are assembled in China because there is a low cost when it comes to assembly labor.
If iPhone were made in the United States and not globalizated it would be extremely disastrous according to Wired, the emerging technology magazine. Apple’s production relies on a “complex supply chain” just to create one iphone. Apple is aiming to expand their manufacturing to India next. They want to manufacture more and make India more aware and interested in their products. They want to grow in India since over 80% of the market is dominated by Android phones.
They started in California but knew that in order to grow they have to manufacture outside of the United States. If they did manufacturing in the United States, it would take nine months to do the work that China is achieving in two weeks! Therefore, Apple has committed to growing and developing outside the United States. There was hesitation at first because they weren’t sure if selling in countries outside the United States would bring in as much profit, and when they started selling it took them awhile to turn into profit, but once they did it became a hit internationally. Almost 70% of apple’s retail store sales happened outside of the United States which was not originally expected. Now that Apple is doing well around the world, they want to convert android users in largely populated countries such as India. Places like India have a large android population because their local phones are run on android software that sell for under $150. This isn’t ideal for Apple, but they hope that if they open a manufacturing location (or multiple) in India it would create jobs, awareness, and interest in people investing in Apple products.
Apple’s brand has created an iconic status allowing it to enter any country with open arms. They have created a fanbase among manufacturers and customers. Countries know that if companies like Apple choose to manufacture in their territory, revenue and jobs will increase immensely.
In order to grow any company abroad, companies have to break into the new market; the local cultures, policies, and audience must be respected when creating the market. Business expansion requires knowledge and intelligence of the locals. Apple did this. Apple knew that after launching and manufacturing in China, the competition would be fierce. They knew they had to adhere with the Chinese market. Apple constantly edits its App Store for the large countries it manufactures in to make sure they keep the governments happy and on board.
After Apple started seeing success in their manufacturing in China, they realized they need China in order to succeed. China doesn’t only produce the products but the sales of the products help the Chinese government decide whether the factories in China are worth it having or need to be shut down.
Apple’s large market value is a result of it being produced overseas and giving only a small percent of profits to overseas workers. Apple globalized itself as soon as it started to build production factories in other countries, this resulted in a wider distribution of the company, also this helped spread the ideology of consumerism.
When China saw a rise in jobs and revenue from Apple manufacturing in their country, the Chinese government provided at least 1.5 billion dollars to help build sections of factories and employee housing. Additionally,Zhengzhou eliminated both value added and corporate taxes for the first five years of production that took place in iPhone City. After the five years, they cut the taxes by half. This made Apple want to continue producing and manufacturing overseas.
Apple’s basic niche strategy is that they need to offer a product mix in a large market. They have to maintain international standards in order to keep true to their own identity and brand. They focus largely on research and developments and make needed changes in every update and upgrade. They want to make sure users can keep track of the upgrades and not get blindsided by large upgrades, Apple also reduces unit costs by outsourcing and importing.
Knowing what is next with Apple is tricky. United States president Donald Trump imposes tariffs on China’s imports. Therefore there is currently an economic slowdown in China. The Chinese slowdown decreased retail sales in the country and caused a dent in Apple’s sales and business. There was a significant downgrade in Apple’s revenue in 2018. “So we saw as the quarter went on things like traffic in our retail stores, traffic in our channel partner stores, the reports of the smartphone industry contracting, particularly bad in November. I haven’t seen a December number yet, but I’d bet it would not be good either” said Tim Cook.
In 2018, the revenue for the company was estimated to be 84 billion, but the first fiscal quarter of the company showed it to be 7.6% lower. President Donald Trump said that Apple’s products could be once again affected by the next round of tariffs which would affect 255 billion in Chinese products that are currently not affiliated with the trade war. Apple knows that these tariffs can cause significant harm to the company. President Trump is also putting pressure for Apple to move their manufacturing back to the United States.
“Wamsi Mohan said under the “most likely” scenario in which Apple moves 10 percent of its iPhone assembly to the U.S., the average selling price of the iPhone would rise by 9 percent. If it shifts 50 percent or 100 percent to the U.S., iPhone prices would increase by 14 percent and 20 percent, respectively.” (CNBC, November 26,2018). According to Forbes, an iPhone would cost around 30,000 to 100,000 dollars- this is only if the sole manufacturing would be in the United States. This would not make Apple’s products as popular as it is today.
Apple launched its Apple Card and Apple streaming service. If Apple were to move manufacturing to the United States, it is predicted that they will stop all production of physical products and focus on the more technological based products. They would focus on creating a better streaming service, battling Netflix. They will focus on creating their Apple card and financing better. This way they won’t have to spend money on physical products until the political pressure of manufacturing cools down.
In order to save themselves from the trade war between United States and China, it is predicted that Apple may relocate to India. Moving the iPhone production to India can improve Apple’s relationships with the Indian market that is currently android populated. The middle class in India is increasing rapidly and expanding. This would allow Apple to be introduced and capture a market that has been difficult to capture for years. Apple would also create mutual benefit with India by creating 740,000 jobs in India. “We have a ton of energy going into the country on a number of fronts,” Cook told analysts about Apple’s efforts in India during the company’s most recent earnings call. “We believe, particularly now that the 4G infrastructure is going in the country and it’s continuing to be expanded, there is a huge opportunity for Apple there” says Tim Cook when asked for comment about expanding to India (Fortune.com, June 26,2017).
Apple’s main reason to go global was the cost and efficiency that other countries showed versus the United States. Personally, I am impressed that when going international Apple chose to open their first store in the Ginza district in Japan that proved themselves as not only a tech company but also a fashion brand and icon. Apple focuses on creating the best technology while also making sure they create products that create a social status.
When reading more about Apple, it was interesting how the original overseas manufacturing started in Singapore and ended up in China. China and Apple seem to have a mutual connection and deal that is being interfered with the United States tariff war. China brought on a lot of benefit to Apple by removing and reducing the taxes that Apple needs to pay the country. China realized that Apple created many jobs for the public, and Apple saw that the efficiency in China is unmatched in the United States.
When talking about globalization, I learned a lot more about it by being able to apply it to one of the largest companies in the world. Apple brought a global influence by choosing to manufacture internationally. Apple was able to create a name globally, and by manufacturing in China- the people knew about Apple. China being an extremely large country was able to help create, buy, sell, and grew awareness of the brand. In order to expand globally, companies have to make sure they respect and adapt to the culture that the country has.
While the entire process of Apple’s globalization and manufacturing abroad makes financial sense, it seems a little unfair in the process. Apple is making more money and giving little in comparison to the actual workers and to China. China is the reason Apple is able to roll out products quickly and for an affordable price. Though, they are giving China a very small percentage of this. Apple’s comparison of efficiency should give them enough reasoning to pay workers more. If Apple were to manufacture in the United States, it would take 9 months in comparison to China’s 3 weeks. China is able to create this iPhones for a couple dollars, while if produced in the United States, it would cost over 3,000 dollars. Apple has never stuck to one single product, their specialty is that they keep branching out and entering new markets and creating new products.
Apple started off creating a simple computer, while they still create laptops and desktops, they have an array of products- all being at the top of their markets. Apple’s only obstacle currently is the tariff war between the United States and China. In order to continue affordable manufacturing, Apple will have to move to India. If Apple decides to move back to the United States, they will have to report to focusing on their more software and financial based products- iTunes, App Store, Apple streaming service, and the Apple card- the new Apple bank account. In my opinion, the loophole for this tariff war is for Apple to move to India. Tim Cook seems to be moving towards that option and creating thousands of jobs for Indians. Cook’s smartest strategy would be do what he did in China; he should create jobs, therefore create awareness. India is a android based country. Though, India’s middle class is expanding and the numbers are rising.
Creating awareness, making more jobs, and making a place for Apple in India will cause middle class people to want Apple’s products more. Overall, Apple has done a phenomenal job of being one of the largest well known companies in the world. They have worked hard to create a sleek, elegant brand that is not only filled with advanced technology but creates a social status. There are hundreds of companies that have created products that are inspired by Apple, but nobody has come close with creating the perfect equation of execution, production, design, and simplicity like Apple has.