Globalisation and Porter’s Diamond Model

Internationalisation in business prospect can be stated as the process of making a product or service that can be full fill the need of two or more countries. In other word it can be said that it is the transfer of business process from one state to another. In the following essay apple company has chosen which comes under consumer electronic good. In addition to that a host country has chosen to understand what are the challenges faced by the MNC Company. The following discussion has based on the concept of globalisation and porter’s diamond model. The porter’s model has give a brief explanation that how a industry become the international based on some important factor. This, study also give a brief explanation about the different strategy of apple inc to enter into the global market. In the end of the essay the importance of the importance of the MNC and the area need to concern for apple has given.

Apple inc. has been enjoying the technological advantage in the industry because of the overwhelming performance in the technology and innovation. The company has the innovation in the product feature and the excellence in the performance. In initial stage, company has faced a number of failure but due to efficient management and consistent efforts it able to become the successful company in the industry.  The key factor on behalf of the success of the apple is the aggressive marketing strategy, product quality, feature, innovation and design in addition to the distribution strategy (Jun and Sung Park 2013). The company manufacture, design and market the electronic product like mobile communication, media devices, personal computer and the variety of software and services. As, of 2018 report the company has 506 retail store worldwide. The revenue of the company is US$ 265.595 billion. Apple is one of the fortune 500 company in the world with 132,000 employee are working across the world. According to Forbes report 2017 apple is regarded as the 7^th best companies.  The company has the retail store around 24 countries across the world including Singapore. 

1.Apple was founded in 1976 by Steve jobs, Steve Wozniak and Ronald Wayne to develop and sell the apple 1. The company had incorporated in 1977 as Apple computer, Inc. The head quarter, of the company at California, US.  The company went for a public issue in 1980 to enhance the financial support and success. Apple is the 17^th most innovative company in the world as per Boston consulting green ranking global.

Strategy of Apple Inc. to Enter into the Global Market

Products:

The product of apple comprises of iphone, ipad, Mac, apple watch, apple TV, professional software such as ios, macOS and tv OS operating system. The company also serve a portfolio of service icloude, apple pay and variety of services.

2.Globalisation of business refers to expand of the business in the international market. Innovation and entrepreneurship skill plays a vital role in the international business. Globalisation increase the trade that resulting in the growth and expansion of the company. This has been observing that innovation has played a key role in the success of the business (Dachs, Stehrer and Zahradnik, 2014). In business globalisation, innovation has aided apple to maintain the customer loyalty and make the product that suitable to the customer preference. Globalisation of apple enhance it gain the competitive advantage over its close rival Microsoft. This, enhance the company to establish the integrated business design that asses to expand business to a different demographic like Asia, Europe to strengthen the business network.

Globalisation help apple to establish its integrated manufacturing and designing facility across the various country for example china, Singapore. This establishment helps the company to manufacture and launch the product in its market such as Asia, Africa and Europe. Globalisation help apple to out sourcing it manufacturing plant to other country like china that benefits the company in term of cost reduction and increase the profitability. This out sourcing due to globalisation has helped the company to expand business while it creates a downsizing in the business and hamper the unemployment in the parent country (Cavusgil, et al 2014). Globalisation promotes the success of the company in the global market.

The overseas manufacturing because of globalisation has reduces the cost and crease in the efficiency (Hurn, 2013). The many of the subcomponents and the subassembly line are present in the Southeast Asia and china. The final assembly line is present in America. Labour is the important factor in the assembly of the apple product. The product of apple are requiring the skilled and heaving the high efficiency and this problem of apple has eliminated through, out sourcing to other country where the opportunity of labour is positive like china (Johanson and Mattsson, 2015).  

Apart from the positive globalisation has some negative impact on the business. Apple has founded some trouble in the operation of the out sourcing plant. Since the early of this year the company has released a supplier responsibility report that address that there some unethical practice has performed by the company. This unethical issue are affecting the apple’s global image and good will (Morrison 2015). The unethical practice hinders the growth and success of the company.

Positive and Negative Impacts of Globalisation on Apple

In the present essay on Apple the host country is china where it investing-

China is the biggest host country partner of the Apple. Apple is enormously depends on china on manufacturing due to the low labour cost. In addition to above, the company get the skilled and the required number of employee in the peck times. The political unrest in china has consistently affected the cost of manufacturing. There also a restriction on the Chinese importers in US to promote manufacturing in US (Brown 2018). The political relation of US with china has an impact on the Apple, which is a US base company. Apple also searches for the alternative for its production, as there is a rise of the cost in china. There are chances of loss in the market share by apple because of nationalism among the (Chinese He, et al 2013). The selling of Apple products has reduced from $18 billion to $13.2 billion in 2018. Apple’s dependence on china may increase the political unrest in the china.

In economic point of view the labour cost in china is increasing which may hamper the cost advantage enjoy by apple. The strengthening of Chinese currency against the dollar will have a key impact on the business investment, expanses and profitability.

China is one of the fastest growing countries in the world with currently heaving second position in the world GDP. This growth is indicating the consumer spending also increasing simultaneously. Thus, it hampers the emotional attachment to the apple product (Davies, 2016). The ethical concern regarding the production in china may limit apple’s product. 

Pollution and other environmental factor in china due to the manufacturing plant of apple is a growing concern in china. This may increase the manufacturing cost and apple may face some legal action. The Chinese government’s efforts toward the cut of green house may increase the energy cost as well as manufacturing cost of apple.

Michel porter’s diamond theory is a model that explain how certain industry of a country are perform in global level due to the presence of certain competitive factors while others are not. This, model also explain about how government of a country can act as a catalyst to boost the country’s position in the international market.

a) Firm’s strategy, structure and rivalry

This states that domestic rival is the act as a promoter to make a firm international competitiveness since, the domestic competitiveness force the company to develop a unique and sustainable strategy. The more is the competitiveness in the domestic market will push the company for innovation and work towards improve the quality.  

China’s Role in Apple’s Globalization

In Apple, the close rival of the company is Microsoft, which is a multinational company while there are a number of domestic competitors in America those push apple to make strategy and enhance to become a global player.

b) Factor conditions

Factor condition of a country refers to the availability of the natural resources, capital and human resources. Porters argued that natural factor are already present while the capital and human recourses need to develop (Porter 1979).

In this essay china is such country, which create the opportunity for apple to invest in their country. Since, Apple requires a large work force for its production and the labours should be skilled. In china there is large work force with low labour cost are present and there are excellent institution present those provide the skill development programme. On the other hand, Apple is an American based company heaving a high capital to invest and it has the main assembly line in America only that indicates that there is skilled employees are there.

c) Demand condition

The demand of in the parent country plays a vital role in the industry growth. A large size market creates opportunity for the product and growth of the company. A highly demand market pushes a company towards innovation and improve quality in addition to growth (Luo and Zhao2013). Industry those gain competitive advantage over the other that indicates that there is a faster rate of innovation and the demand for the product is high.

Apple has known for its innovation and the quality of the product. Although the product of the company is high cost as compare to other but the demand for the phones is more in the American market. Due to the high demand and the unique strategy of the Apple makes, it is a global leader.

d) Related and supporting industry:

There is a important role of the supporting industry in the growth of an particular industry. A company’s benefits lies on its supplier. The efficient input with high quality and timely feedback makes the whole process faster.  It takes a long time to make a good strategic alliance with the suppliers.

Apple is an electronic goods producing company while it has strong need of the highly advanced and innovative software, which found in Americas silicon valley where all kind of tech giants and starts-up present who support the company like apple. Apple has its own software company that act as its supplier of technology.

Michel Porter’s Diamond Theory

e) Government:

The role government is act like a promoter, which enhance the growth of the industry in the country. The government enhance to create a free market where the restriction in doing the business is less. There also a promotion to the innovation by the government will enhance the growth of the company. Development of the infrastructure, education to make skilled work force and promoting to the domestic competition is the main role of a government.

f) Chance:

War, natural disaster and terrorist are some factors also affect the growth of an industry. These events are beyond the control of the government, which may cause impact on industry. However, the industry under which apple comes that is software is not directly influence by these factor. 

Market entry strategy of Apple:

There are mainly three strategy concerned by apple to enter in a new market which are licensing, exporting and importing strategy. Licensing gives some positive factor to enter into markets that are not present in other strategy like joint venture, strategic alliances and more. The major benefits like low risk as compare to joint venture and strategic alliance, low regulation that address to easy in manufacturing by compliances the regulation (Wach 2015). There also a high return in licensing strategy which is more as compare to other  strategy in international market. There also other method like exporting and importing which has followed by apple.

Apart from the above there also some important factor that plays a role of strategy to enter into the global market that are wide acceptance of the products, unique feature, brand value and differentiation strategy helps apple to enter into the new market.

Constraint of apple entry strategy:

Apple mainly concern on the licensing to enter into a market. Since in licensing there is a lack of direct regulation from the company that gives rise to the unethical issues which has mentioned in the early report of apple. There also a chance of decline the product quality which may hamper the brand image of the product. In addition to the above it may psychological influence on the customer’s mind regarding the production. In export and import situation the cost of the product may increase due to high export and import duty.

MNC and its impact:

When a MNC company goes for investment in other country it brings the FDI to the host country. The inflow of cash to the host country will increase the balance of payment of the company. The increase in FDI will help the country in capital formation. The most important aspect of the MNC is to generate the employment in the host country that enhances the host country to better management of the human resource of the country (Giuliani and Macchi 2013). MNC is also paying the tax in host country that becomes the source of revenue for that country. MNC brings the new technology and help the country to growth with the global change (Minbaeva, et al 2014). In addition to the above MNC act as the promoter to the domestic business that directly and indirectly depend on the company. 

Based on the sustainable development goal the major concern area for apple inc are industry, innovation and infrastructure development. It should maintain decent work and helps in achieve the economic growth, responsible consumption and production (Gambleand and Thompson  2014). There are two important area that must have concern are climate action, affordable and clean energy because these two issues are currently found in relation to apple.

Conclusion:

The analysis of the above essay with regards to the internationalization can be concluded that it is incorporation of the national economy with the global market. Internationalization of business is associate with the expansion of the business from parent country to host country or associate with international trading of export and import. This process is based on the concept of mutualism that provide the benefit to both the parties which has analysed in the study that how apple and china get benefited from each other. This helps the host to bring revolution in the country through FDI and achieve the sustainable growth. In the above discussion apple company has taken to understand the concept of internationalisation. This study has given some important idea like how the country’s demand, competition and government play an important role in the growth of an industry. There also some major recommendation has given to the apple such as apple need to more focus on the environmental and the energy sustainability. 

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