Global Corporate Strategy: Apple’s Innovation, Global Demand, and CSR Practices

Question 1: Innovation by Apple and factor endowment as well as business strategy of Apple

Innovation is one of the 21^st century buzzwords, as most of the business firms, whether they are small, large or medium in size, are focusing on innovation of their business. Some business firms innovate their product lines, and some innovate their business operations. In past few years, it has been observed that those firms whose product were not innovated lag behind in the competition and failed to survive in the market. For example, Nokia once had leading position in mobile sales but it does not innovate its operating system and due to this reason, its products sale decline (Heracleous and Papachroni., 2016). Ultimately, market was taken over by another players. Kodak camera is another example of business failure, where main reason behind business failure was non-innovation of the business operations.

There are two types of innovation, namely open and closed innovation, as both are opposite to each other. Open innovation refers to the situation where business firm does not depend on internal resources like technology, infrastructure and human resources. In this sort of innovation, business firms usually make use of both internal and external resources so as to do innovation in best manner. As part of external resources firm, take feedback from the customer, purchase technology from another firm and hire experts that act as freelancer or working in any other business firm. It can be said that such kind of innovation is highly used by the firm. This is because business firm can never have all of the required resources and intellectual property at the workplace. It is the open innovation that provides access to the business firm to outside  resources and conducts innovation in better manner. Joint venture are often determined by the business firms to innovate their existing product line and increase market share (Pisano, 2015). Thus, it can be said that there is huge importance of open innovation in today's era.

Closed innovation is the inverse of open innovation, and under this one it does not make use of external resources to do innovation in the business.  In this company, prepare alternatives and evaluate all of them. After evaluation of alternatives, the best one is selected by the company. In this regard, multiple tools and techniques are used by the business firms and best one is chosen by the manager.  There is difference between open and closed innovation. One of the major differences is that in case of closed innovation idea, inventions and investigations as well as development required to place a product in the market. Usually, in close innovation, business firms share technology with each other. This is done because firm is specialized in a specific technology and in same way, another firm is specialized in another technology.  Thus, by sharing technology, one obtains new infrastructure that promotes business growth in the future time period.

Apple is following the strategy of closed innovation in its business. Under this strategy, the company basically uses its internal resources. Over last couple of year’s firm has done lots of innovation with limited resources. company has expert intellectuals who are highly talented and paid professionals (Gehani, 2016).  Earning a higher amount of profit assist business firm in making huge investment on its innovation project. Hence, it can be said that firm already have excellent advanced technology infrastructure with high standards intellectual property and due to this reason, the company is doing closed innovation.

Factor endowment is one of the most important terms that is used by business firms. In context of Apple, this thing applies, as it can be seen that a large-scale firm produces its Smartphone and iPods in China. It can be observed that labor cost in China are 10 to 60 USD cheaper than in the USA. Moreover, Apple get a larger workforce easily in China then USA.  When Apple needed 8700 engineers to look after workforce of size 200000 that are involved in making iPhones, then in that case it will take 9 months in USA to find relevant employees. However, if same thing is done in China, then in that case same labor at low price and with relevant skills in required number is easily available to Apple in China.  Thus, it can be said that labor cost is low and availability of labor as factor is high for Apple. sufficient amount of land is available to Apple in China at low price. Thus, it can be said that factor of production are available at cheaper rate to Apple.

Supporting industry to Apple is IT sector. This is because with applications and internet mobile or IPod is nothing, as it seems zero or useless. Applications that are in the Mac play store time to time have important updates which make them more relevant for people (Kim and Jun,  2015). global IT industry is growing at growth rate of 9% on yearly basis, which is high. It is the mobile applications that make use of mobile necessity for the people.  decline in innovativeness of the telecommunication industry and IT sector may have negative impact on sale of the company product. It is the consistent preparation of new applications which makes use of the iPod and Smartphone attractive for people and leads to fast growth in the demand for Apple products.

Figure 1: Apple product sales

(Source: iPhone, iPad and iPod sales from 1st quarter 2006 to 4th quarter 2018.)

Stability is not observed for Apple products. In the current analysis, in respect to demand, three products of the company taken into account are the iPod, the phone and the iPad. It can be seen from the above chart that in one year demand goes high but in three years after that, demand declined by higher percentage. Interesting fact is that the rise and fall in demand for Apple's three products is very high, which is matter of concern for the business firm. At least there must be stability in demand most of year (iPhone, iPad and iPod sales from 1st quarter 2006 to 4th quarter 2018., 2018). Poor economic condition at global level may be one reason behind low demand for the firm's products.

As part of the business strategy now a days, the company is fully committed towards delivering customer a good user interface experience.  In this regard, the firm is focusing on innovating its hardware, software and services.  firm is updating its technology infrastructure and under this it is improving its own operating system. Apple is focusing on designing and developing its products in better manner then before (Yun, Won and Park, 2016). main aim of the business firm is to make available customers products and solutions with innovative design, superior ease-of-use and seamless integration. As part of its strategy, the Company continues to expand its platform for the discovery and delivery of digital content through its varied products. Thus, such a strategy will definitely lead to fast growth of the business firm

One of the major rivals of Apple are Dell, Sony and Lenovo. These rivals are already have strong presence in the personal computer and laptop market. In terms of personal computer and laptop sales, Apple is facing huge competition from Dell, Sony and Lenovo (Kim, Kim and Foss, 2016). It can be observed that Dell and Sony in past few years have made heavy expenditure on their technology infrastructure and due to this reason, in many market and between specific sort of people, these firms have strong base. Even memory retention value of these brands is also higher than that of Apple.

US Government is heavily supporting Apple in its business operations and due to this reason, on this front, the firm is not facing any sort of problem in its business.

Question 2: Global and local demand

It is very important to understand the meaning of global and local demand for the product. Local demand refers to the demand for the product within the nation where company was first established. On other hand, global demand refers to the condition where demand for the products at global level is taken into account. It can be observed that Apple is the leading MNC and operates in multiple nations of the world. Different products have strong demand in the different markets.  Hence, meeting the demand of the local and international markets has become hard task for the business firms. Simultaneous meeting of demand in both domestic and international market have some advantage and disadvantages, which are explained below.

Advantage

One of the major advantage of serving both domestic and international market is that the firm is able to develop loyal customer base in both markets (Den Hartigh et al., 2016). In case, due to recession or any other factor, demand of the company's product declines in the foreign market, then in that situation there will be domestic market from where sales can be generated in easy way.

second advantage is that if firm is focused in both markets, then in that case it can manage to gain huge market share in the local market. People prefer to buy branded products, and if they see that local is getting huge success in the international market, then in that case local people does not give importance to the other rivals in the domestic market. Hence, by performing well in the foreign market, firm control domestic market.

Disadvantage

One of the major disadvantages of focusing on domestic and international market at same time is that many times customers of both areas are of different taste and preferences.  Such kind of thing better apply on garments business. In such a situation, it becomes very hard for the firm to manage variety of people through multiple products. Hence, in an attempt to focus on both areas, the firm ends up in a situation where it fails to focus on domestic or foreign market. Ultimately, it loses its market share (Lusch and Nambisan, 2015). Nokia is one of the best examples, as it think that India is the market where it will not lose its share but because of widespread business, it failed to pay attention to Indian market and was wiped out of it by the rivals. Hence, disadvantage is that if firm is not able to address both market altogether, then it can face huge loss in the business.

It will be better for Apple to focus on both markets. This is because there are fewer or no competitors of its products in the market. Second, in terms of technological advancement, firm products are already ahead of rivals and due to this reason, firm is able to meet both domestic and international demand and it must simultaneously focus on both areas.

In order to maintain leadership in the domestic and international markets, business firms need to adopt multiple strategies like product differentiation and cost leadership. One of main factor that motivates people to not purchase Apple products is that the price is very high. In nation like India, where people now become technology- and fashion-oriented, demand of Apple products may be high if their price becomes low or moderate (Hacklin, Björkdahl and Wallin, 2018). Apple is already following product differentiation strategy in its business, as it can be seen that over years firm has been innovating its product line and offering people something new and different. Hence, it can be said that such a thing will assist firm in elevating its business growth.

Question 3: Evaluation of the senior management and CSR practices of MNC's

Apple company seems to be committed in bringing best experience to their customers with the use of its innovative software and hardware services. An organizations strategies reflects its unique ability in designing and developing their own operating systems. With respect to the company's strategy, it continues to expanding its platform for delivery and discovery of the digital content and the applications by its digital services that allow its customers to download the digital content, Apple watch, IOS, TV applications and the books either through Mac or personal computer. It provides full support to the society for developing the third-party hardware and the software products that complement the enterprise offerings. Apple believes a high-quality experience of buying with the knowledgeable salesperson who conveys value of corporation's services and the products that greatly enhances ability to retain and attract customers (Yamazaki, 2019). Thus, strategy of company involves expanding and building its own online stores, retail stores and third-party distribution network for effectively reaching more and more customers. In addition to this, it facilitates them with high-quality experience and sales. The firm believes an ongoing investment in R&D, advertising and marketing is crucial for development and sale of innovative services, technologies and products.

Senior directors ensure the conduct of an audit in compliance with public company accounting oversight board that needs to be performed and plan an audit for obtaining assurance regarding risk assessment and financial reporting. According to section 135 of companies Act 2013, the rules that are promulgated under the BOD's of Apple in adopting the adequate CSR policy.

The company adopted various practices with respect to corporate social responsibility that are contributing to the technology incubators that are approved by the government, Ensuring sustainability of the environment, promoting equality of gender, promoting education involving a special education and the vocational projects. Apple indulges its suppliers in sustainability program where around 44 of them have been pledged to use 100% of the renewable energy in respect of their production (Agrawal,  Schaefer and Funke,  2018). The company had taken significant steps in area of the water stewardship involving controlling over the use of freshwater, improving quality and demonstrating leadership by providing for the protection over the shared resources of water. The emphasis of an entity is in improving the use of water through developing clean water and safety programs, which in turn prevent water pollution. Apple opts for designing centres of new data for using very little water for cooling purpose. This helped an entity conserve more and more water and protect existing resources for ensuring continuous water supply.

Question 4

I believe that multinational corporations are the large organizations that is been incorporated in one of the country that produce and sell the services and goods in several countries. The two major features of MNC's is large size and global presence, controlled mainly by parent company. I observed that there are various benefits attached to external innovation that include reduced cost relating to research and development,  helps in improving productivity, results in inclusion of the new customers in an existing development process, more accuracy for the customers targeting and the market research, viral marketing, etc (Rhéaume and Gardoni,  2016). However, some of the limitations are also attached with external innovation, that is, there are chances of revealing information that is not been intended for the purpose of sharing. Increased complexity is another major limitation that arises through external innovation and regulates the ways in which a contributor affects the project.

Internationalization also provides for large number of benefits that involve access to export financing, better management of risk, easy cash-flow, benefits through currency exchange and increased revenue with decreased competition. On the other hand, it results in brain drain of the students of the developing countries, weakening regional and national engagement, adverse effect on the employment sector, acculturation and the loss of indigenous values and culture (Sapinski, 2015). I analysed that the roles and responsibility of the top  executives of Apple company is to maintain effective control over the financial reporting and to express opinion on the internal records of the company based on the audit.

CONCLUSION

On the basis of above discussion, it is concluded that Apple is innovating its business operations consistently and following closed innovation model in its business. firm must operate its business in both domestic and international market because its products are preferred by people in both sort of market. By reducing price of the products, the firm can further improve its grip in the market. It is also concluded that firm understand its social responsibility and due to this reason, from time to time, it perform varied corporate social responsibility activities across the globe. By summing up the above report, it has been assessed that competing across the world allows Apple Inc. to gain worldwide customers and in creating effective global marketing standards or strategies that in turn allow an entity to adapt new opportunities on the basis of customer trends and the demands in the entire marketplace around the globe. With technological advancements and expansion of international trade, Apple could be able to incentivize in selling its services and products in the foreign market. Operating the business on the global level enables an enterprise to expand market share, reduce costs, and become more and more competitive.

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