International Trade: Apple Inc.
Introduction
International trade is a cross-border exchange of capital, products, and services due to a need or desire for goods or services. Basically, international trade is the globalization of the world, which allows countries to conveniently and expediently procure goods and services from other countries. Global trade has always existed and has an economic effect on participating countries. Conducting trade on an international level is a dynamic mechanism relative to domestic trade. Trade between two or more countries affects trading factors such as currency, state policy, economy, the legal system, laws as well as markets. However, some international economic organizations, such as the World Trade Organization, were created to regulate and validate the trading process between countries with different economic standards. Such organizations are working towards international trade facilitation and development.
Moreover, international trade provides the ability for customers and countries to be exposed to new markets and goods. Increasing global trade is important to sustain globalization. Without foreign trade, countries are limited to products and services manufactured within their own borders. Most countries benefit in different ways from foreign trade. For instance, in the United States, Apple has benefited in international trade since it can export its computer hardware to foreign countries. Therefore, this paper will focus on exploring the international business of Apple Company.
Apple Corporation
Apple Inc. is an American global company mainly dealing with technology-based products and services. It is headquartered offices in Cupertino, California, in the United States of America. According to Belllis (2019), the company was founded 43 years ago by the former chief executive officer Steve Jobs in collaboration with Steve Wozniak and Ronald Wayne. It commands a considerable market share in technology-based products and services, competing with Amazon, Google, and Facebook. Apple has established a renowned brand that sells high-end clients being close to the top of the I.T. as well as the communications market. Apple has been successful through continuous innovation, but lately, in the international market, Apple has shown several significant areas of concern. Competition from companies like Samsung and smaller mobile phone manufacturers in places such as China and India has had a direct effect on the iPhone’s iconic sales.
Products
The leading company products of Apple Inc. include; Macintosh, iPod, iPad, Apple Watch, Apple Tv, and HomePod. It also offers services including Apple Arcade, Apple Music, Apple News, Apple pay, Apple Tv+, iCloud, App Store, iBook, iMessage, as well as iTunes. According to Kanagal (2017), these products are innovatively designed and produced to fit the customer’s needs. Although the company does not use natural materials for their electronic devices, it outsources for copper, aluminum, and other metal from over 500 suppliers around the globe. It has vast human resources ranging from its current CEO Tim Cooks, designers, programmers, engineers, retail stores, and suppliers.
International Involvement
Apple Inc. has established global strategic partnerships with numerous international companies. Apple and Disney allied together to boost Disney’s store performance. The partnership allowed reduced iTunes and Disney store losses. The partnership significance to the success of Apple Inc. is with H.P. The collaboration helps H.P. to supply its licensed Apple iPod music. Moreover, another tactical partnership is between Apple and Microsoft firm. According to Liang (2016), Apple is able to access human capital in China through collaboration with Foxconn. The alliance’s mission is to create Office for Mac and integrate it with Internet explorers. Over time Apple has obtained other firms such as Astarte-DVD, Poly-9, and C3 Technologies as well as Bluebuzz to increase its markets. Such partnerships have enabled diversifying risk, increasing the penetration of domestic and international markets, boosting competitiveness, and benefiting from tax gains.
Apple Inc. operates 506 retail stores across twenty-four countries around the world. The United States is the location to over half of these outlets, forty-two of them are in China, thirty-eight in Europe as well as other parts of the world. Apple Corporation has recently spent more than $500 million in international, domestic investment to support research and innovation in China. According to Liang (2016), Apple Inc. has also been interested in venturing in India, the second global leader in the smartphone manufacturing industry. Furthermore, manufacturing is a long process involving design, components as well as assembling. Most of Apple’s products are assembled in China though they may be designed in the United States. Through its widespread retail stores’ network, the company can exports large scales of its products globally. For instance, according to Reisinger (2019), in 2018, the company iPhone sales recorded sixty-four point five million units, translating to fifteen point eight percent of the total global market share. However, Apple does not engage in franchising.
Hofstede Index
In addition to California, where the company operates, Apple’s primary manufacturing facilities are in China, Mongolia, Taiwan as well as Korea. According to Hofstede Insights (2020), the Hofstede indexes vary in various parameters in such countries. For example, in contrasting “PDI” Power Distance Index, China has the largest PDI of eighty, with Taiwan being fifty-eight, Korea being fifty-five, the U.S. being thirty-eight, and Mongolia being eighteen. Therefore, this indicates that the Chinese support hierarchical order and authoritarian government system, with Mongolians being the least likely group in their society to acknowledge this aspect. In the case of Uncertainty Avoidance Index “UAI,” Mongolia has a lead of ninety, followed by Korea of eighty, Taiwan of sixty-nine, the USA with forty, and, finally, China of at least thirty. In this context, Chinese people are ready to explore new ideas, as compared to Mongolia. As the basis for its business strategy, Apple uses the awareness of these indexes. However, Apple should increase production in China because the market is less competitive in terms of avoidance of uncertainty.
Challenges
Although culture, values, and societal norms may vary with those in the United States, Apple has ventured in foreign countries, and their market has seen robust growth. Their success has always been attributed to their conforming to the legal and marketing policies of the host countries. According to Thao & Tsanthaiwo (2017), they however, face various constraints in these countries. For example, the company has to start with political challenges to ensure they align their marketing strategies with those of the host country to avoid political interference. In economic constraints, the downturn that recently struck European countries consequently affected domestic and foreign markets in these countries. On the flip side, however, Apple got an opportunity to introduce cheaper products to the internal markets. As a company ventures in international markets, the social and cultural diversities key areas to consider in marketing. Apple, for instance, has to consider the continuously changing needs of the younger generation continually. The cultural environment is open, and the products must not discriminate against any culture. Apple products are based on technology that is continuously changing. The continued pirating of technology continues to be a significant hurdle for companies like Apple to handle. The company has to consider maintaining an edge over its rival competitors.
Market Mix
. According to Greenspan (2019), the company innovatively design their products to fit customers’ preferences. Their Macintosh, iPod, iPad, and Apple software remain the best products in their respective industries. Their products are packaged in the same fashionable style in all its markets. On Price, the company maintains premium pricing for all their products. Their customers are loyal and willing to pay for the high-end innovations and technological advancements in the products. Apple uses promotion effectively for their products. While commercial adverts run on the initials stages of product launch, print adverts continue to run throughout the product’s life. They ensure to localize their message to fit their target market. Lastly, Apple keenly controls its placement points. Distribution of its products is only done by authorized retail stores, Apple stores, or online apple stores. Their effective control of distribution ensures low distribution costs for the company.
Conclusion
International trade has played a significant role in various industries. Apple continues to enjoy a good market share in all its products globally. The company ensures to develop effective marketing strategies for their innovative products. Strategic alliances, licensing, and foreign domestic investments have propelled the company’s success to greater heights. This, however, has not been without challenges. Competitiveness in the industry, pirating of its technologies, social and cultural diversities, legal reproach in foreign markets, political factors, and economic constraints being some of the biggest hurdles. Through consistent branding, promotion, pricing, and excellent quality, the company strives to maintain its market share and increase revenue.
Reference
Greenspan, R. (2019). Apple Inc.’s Marketing Mix or 4Ps (An Analysis) – Panmore Institute. Panmore Institute. Retrieved 25 August 2020, from http://panmore.com/apple-inc-marketing-mix-4ps.
Bellis, M. (2019). A Brief History of Apple Computers. ThoughtCo. Retrieved 25 August 2020, from https://www.thoughtco.com/the-history-of-apple-computers-1991454.
Hofstede Insights. Hofstede Insights-Country Comparison -. (2020). Retrieved 25 August 2020, from https://www.hofstede-insights.com/country-comparison/
Kanagal, N. B. (2015). Innovation and product innovation in marketing strategy. Journal of Management and marketing research, 18(2015), 1-25.
Liang, G. (2016). The “Fox–Apple” Partnership in the Global Value Chain: How Did Foreign Direct Investment and Contract Manufacturing Reshape the Landscape of the Electronics Industry?. In Uncovering value added in trade: New approaches to analyzing global value chains (pp. 141-166).
Reisinger, D. (2019). Apple iPhone Sales Tanked at the End of 2018. Fortune. Retrieved 25 August 2020, from https://fortune.com/2019/02/21/apple-iphone-sales-2018/#:~:text=During%20the%20fourth%20quarter%20of%202018%2C%20global%20iPhone,of%20any%20major%20smartphone%20maker%20during%20the%20period.
Thao, T., & Tsanthaiwo, S. (2017). Apple Inc. In the Years to Come. The Years to Come (June 20, 2017).