Apple, one might say an obvious choice for a global company. But
Apple is not only defined as a global company because of that obvious reason of
having Sales and Marketing presence all over the globe. It is a global company,
since it has been shaping the way our cultures evolved in alignment with its
constant introduction of innovative digital platform and services. Apple’s
brand, for over a decade now, is chosen as one of the 10 most recognized and
impactful brands 1. Since the introduction of the IPod and ITunes,
to the Apple watch, TV, and home. The cultural shaping effects of Apple’s
products and services are seen throughout the globe; As of January 2016, there
are more than 450 Apple retail stores in operation around the world, which
employ about 50,000 people (for retail location list 2). Apple
currently operates in 492 retail stores across 19 countries (Feb, 2017) 3.
Furthermore, Apple is a global company
because it outsources hundreds of thousands of manufacturing jobs to countries
like Mongolia, China, Korea and Taiwan 4. Rare earthly elements
are sourced 90% from Mongolia & China. Batteries, Chips, Memories and
Panels are manufactured in Korea, the IPhone’s gyroscope is manufactured by
French-Italian Company. The assembly is all done out of the US, 85% of the
IPhone assembly is in happening in China. Last, but not least, Apple is truly a
global company for its tremendous investment in globalization, and more
specifically in green globalization efforts to reduce its own carbon foot
print, its supplier’s carbon foot print, and it’s loyal customer education 5.
Apple recently invested over a $1B in an Uber alike company out of China, that
develops innovative algorithms to predict traffic trends and more (You wonder
why is that related; think of all the time Apple employees and subcontractors
spend on commuting, and now imagine the planning of next assembly lines,
manufacturing, cities and more) 6.
Apple is a global company. Being a global company requires global
operations. Apple’s global operations span from through its entire value chain
from sourcing and manufacturing to sales and Marketing. Apple runs its global
operations from their main headquarters in Cupertino, CA impacting the lives of
hundreds of thousands and even maybe millions of lives.
With the advancement of technology, and the improvement of digital
devices, comes the need for sourcing rare earthly minerals (see exhibit A). 90%
of these minerals are being sourced in Mongolia & China 2. Over
the years, Apple has developed an entire ecosystem of suppliers who support all
business operations. The main driver were to get high quality materials,
in a significantly shorter lead times, at a cost that represents the best
possible value to customers and shareholders.
Manufacturing & Assembly
At least 97% of Apple’s procurement expenditures for materials,
manufacturing and assembly of products are finished worldwide in 2013 7.
Why is Apple so keen on its global manufacturing & assembly? Many
would think that it is strictly due to lowering your costs mainly because of
much lower labor cost, that is not the main reason, but rather because those
factories (e.g. Foxconn, which is a Taiwan company) could produce much
faster with quite a large scale and flexibility. The period to hire
8,700 engineers to manage 200,000 factory workers will take 9 months in the US,
and only 15 days in china 2. In 2012, 85% of Apple’s IPhones are
assembled in China. So why Apple is so keen to expand its global outsourcing? It
is mainly derived from a very well defined strategic vision and aspiration
based on four key factors; 1. Risk Diversification 2. Capacity Management
3. Margins Sustenance 4. Supplier Innovation 7.
Running this enormous and complex operations, requires highly trained, organized,
and disciplined division (and managers). The importance of running such a
dynamic and continuous operation is what truly defines Apple.
Marketing & Sales
As of February 2017, Apple operates 492 (Direct to consumers)
retail stores across 19 countries 2. Apple’s brand is located over
a decade now in the top 10 most recognized and valued brands (by Interbrand,
and other sources like business insider, financial times and etc.). Apples
product are “one size fits all”, meaning Apple a standardized design across all
regions, the same range of products for all countries, and no visible
customization – also called localization – except for the
power source, pricing, and carriers’ specifics. It’s about finding the
denominator for a particular product that is region-blind. Apple practice a
minimalist approach. Steve Jobs said, “The main thing in our design is that we
have to make things intuitively obvious”. In addition Apple choses carefully
where and how to roll out their product, this approach together with the
standardization of their product enables Apple to sell in many more regions and
save significantly on costs 8. On the other side, in recent years
Apple is trying to regionalize its digital and
regional campaigns, and focus less on translating, or “localizing,” big
brand campaigns for global markets 9.
Apple has various amount of competitors in a global perspective in
almost any of their product category. From low cost Chinese brands (Huawei is a
Chinese telecom giant that’s the third-largest smartphone maker in
the world… and it even passed Apple briefly this past summer for the #2
spot) and Chinese knockoffs, to higher quality brands like Samsung, LG,
Sony, HP, Google, Amazon, and Microsoft. Some competitors are competing on
hardware level only, some are software, and currently only one (Google) is
competing with Apple in both.
Apple’s design and brand recognition is the stronger than all of
its competitors, having only Google getting close. All of Apple’s products are
priced higher than its competitors, and in many cases, many will argue that is
offers more intuitively obvious user experience.
Apple’s Ethical Practices Globally
Fiscal Year 2016 Summary ($416M)
Apple has a few layers of social/environmental
initiatives. Apple’s Green Bond Impact is umbrella vision and mission of the
company. In 2016 Apple invested over $1.5B proceeds from Apple’s Green Bond are
dedicated to funding environmental projects, from renewable energy to safer
materials (See exhibit B) 10.
(Go to the full Green Bond 2016 report 10). Apple is driving
programs that minimize carbon emissions, eliminate landfill waste (thriving to
Zero waste manufacturing & Assembly facilities), conserve water, and
replace unsafe chemicals. E.g. Apple has partnered with a supplier and
its local recycling facility to develop a better process for separating and
recycling waste, As a result, the supplier is now able to recycle all of
its waste rather than sending it to a landfill or an incinerator. In addition, developed
a new process for managing food waste, allowing them to send it to a local
composter instead of a landfill. They then used what they had learned to
develop a process for their own suppliers that helped their suppliers collect
and reuse packaging material 11. Apple claims that they
invest in people; in 2016 only, 2.4M+trained on their employment rights, 689K+participated
in career growth and life skills training, 2.1M+Supplier Employee Education and
Development students to date 11. But the Chinese Labor report 12,
shows a different picture, of below average wages ($2/hr before deductions),
working close to 300 hours per month, getting cramped in poorly maintained dormitories.
In general, significant amount of reporting Apple being bullish, many times
acting illegal, completely opposite to their “vision/mission”.
From our analysis it seems like apple is taking the advantage of
marketable environmental impactful action, as long as it doesn’t have a net negative
impact on their performance and processes, e.g. the social awareness and legal
benefits of their manufacturing employees.