International Business: Impact of Internationalization on MNEs and Host Countries

This study explores the impact of internationalization on multinational enterprises (MNEs) and host countries in the field of international business. It discusses the challenges faced by MNEs in cross-border operations and the benefits they receive. The study also examines the role of government policies and Porter's Diamond Model in globalizing businesses. It analyzes the market entry strategies of Apple Inc. and the impact of MNCs on host countries. The study concludes with recommendations for sustainable international business practices.

Running head: INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS
Name of the Student
Name of the University
Authors Note

1
INTERNATIONAL BUSINESS
Executive summary:
The present study is based on the internationalization of a business and its impact. To understand
the concept a MNE company Apple inc and its host country china has concern in the study. The
study gives the overview of the challenges face the MNE in cross border country and the benefit
that it gets. The essay discusses about how government can place role in globalisation of a
business through the porter’s diamond model. The session has discusses about the entry strategy
of Apple in the global market and the impact of MNC on the host country. There has some
recommendation given base on the concept of sustainability that it needs to give prioritise.

2
INTERNATIONAL BUSINESS
Table of Contents
Introduction:....................................................................................................................................3
Company analysis:...........................................................................................................................3
Answer to question no 01:...........................................................................................................4
Answer to question number 02:...................................................................................................4
Host country analysis:......................................................................................................................6
Porter’s diamond theory:.............................................................................................................7
Market entry strategy of Apple:.....................................................................................................10
Recommendation:..........................................................................................................................11
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

3
INTERNATIONAL BUSINESS
Introduction:
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.
Company analysis:
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

4
INTERNATIONAL BUSINESS
the world with 132,000 employee are working across the world. According to Forbes report 2017
apple is regarded as the 7th best companies. The company has the retail store around 24 countries
across the world including Singapore.
Answer to question no 01:
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 17th most innovative company in the world as per
Boston consulting green ranking global.
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.
Answer to question number 02:
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

5
INTERNATIONAL BUSINESS
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.

6
INTERNATIONAL BUSINESS
Host country analysis:
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

7
INTERNATIONAL BUSINESS
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.
Porter’s diamond theory:
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.

8
INTERNATIONAL BUSINESS
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.
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

9
INTERNATIONAL BUSINESS
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.
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.

10
INTERNATIONAL BUSINESS
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.

11
INTERNATIONAL BUSINESS
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.
Recommendation:
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.

12
INTERNATIONAL BUSINESS
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.

13
INTERNATIONAL BUSINESS
References:
Brown, R.A., 2018. Chinese business enterprise in Asia. Routledge.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Dachs, B., Stehrer, R. and Zahradnik, G., 2014. The internationalisation of business R&D.
Edward Elgar Publishing.
Davies, A., 2016. The globalisation of corporate governance: The challenge of clashing
cultures. Routledge.
Gamble, J. and Thompson, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.
Giuliani, E. and Macchi, C., 2013. Multinational corporations’ economic and human rights
impacts on developing countries: a review and research agenda. Cambridge Journal of
Economics, 38(2), pp.479-517.
He, J., Mao, X., Rui, O.M. and Zha, X., 2013. Business groups in China. Journal of Corporate
Finance, 22, pp.166-192.
Heracleous, L., 2013. Quantum strategy at apple inc. Organizational Dynamics, 42(2), pp.92-99.
Hitt, M.A. and Xu, K., 2016. The transformation of China: Effects of the institutional
environment on business actions. Long Range Planning, 49(5), pp.589-593.
Hurn, B.J., 2013. Response of managers to the challenges of globalisation. Industrial and
Commercial Training, 45(6), pp.336-342.

14
INTERNATIONAL BUSINESS
Johanson, J. and Mattsson, L.G., 2015. Internationalisation in industrial systems—a network
approach. In Knowledge, networks and power (pp. 111-132). Palgrave Macmillan, London.
Jun, S. and Sung Park, S., 2013. Examining technological innovation of Apple using patent
analysis. Industrial Management & Data Systems, 113(6), pp.890-907.
Luo, Y. and Zhao, H., 2013. Doing business in a transitional society: Economic environment and
relational political strategy for multinationals. Business & Society, 52(3), pp.515-549.
Minbaeva, D., Pedersen, T., Björkman, I., Fey, C.F. and Park, H.J., 2014. MNC knowledge
transfer, subsidiary absorptive capacity and HRM. Journal of International Business
Studies, 45(1), pp.38-51.
Morrison, J., 2015. Business ethics: New challenges in a globalised world. Macmillan
International Higher Education.
Porter, M. E., 1979. "How Competitive Forces Shape Strategy." Harvard Business Review
57(2): 137-145
Wach, K., 2015. Entrepreneurial orientation and business internationalisation process: The
theoretical foundations of international entrepreneurship. Entrepreneurial Business and
Economics Review, 3(2), pp.9-24.
Waddell, S., 2017. Global Action Networks: A Global Invention Helping Business Make
Globalisation Work for All 1. In Globalization and Corporate Citizenship: The Alternative
Gaze(pp. 31-52). Routledge.

15
INTERNATIONAL BUSINESS
Warwick, P., 2014. The international business of higher education–A managerial perspective on
the internationalisation of UK universities. The International Journal of Management
Education, 12(2), pp.91-103.