Globalization: Business Impacts, International Management & Apple Case

This essay examines the multifaceted impact of globalization on contemporary businesses, highlighting the essential skills required for international managers to navigate the complexities of a globalized environment. It discusses how outsourcing and offshoring contribute to globalization, usi...Read More

managing across borders
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Research, discuss and identify how ‘globalization’ impacts business today, and what
international managers must know to stay ahead of the game. Identify and discuss how
outsourcing and offshoring contribute to globalization using a company case study to
identify the challenges, opportunities and problems that globalization presents.

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Executive summary
Globalisation of businesses includes flow of services and goods to foreign countries,
enhance capital flow, spreading of technology, reducing trade barriers and tariffs along with
spreading knowledge beyond cross borders. Globalisation of companies can impact decision
making processes in management due to complex and interrelated decisions which requires
global managers develop skills and abilities to stay ahead of the game. In globalisation,
outsourcing and offshoring have also developed consequently due to increased knowledge of
technology and enhanced transportation available between cross border nations. Moreover,
such openness of knowledge has allowed growth in businesses where every firms have
become more or less dependent upon each other and ones who reflects best practice, stays
competitive and successful in global market. This paper will analyse concepts related to
globalisations and its impacts on current businesses along with finding out what global
managers require to achieve success in global business environment. To understand benefits
and risks associated with outsourcing and offshoring, this paper will analyse literature related
to it along with applying it in Apple Inc. company to analyse the case study reflecting
outsourcing activities undertaken by Apple Inc. while considering globalisation and cross
border operations.

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Table of Contents
Introduction................................................................................................................................3
Main body..................................................................................................................................4
How does globalisation impact contemporary businesses”?.................................................4
Essential skills required for managing global firms...............................................................6
Outsourcing and offshoring contribution to globalization.....................................................7
Case study..............................................................................................................................9
Conclusion...............................................................................................................................12
References................................................................................................................................14

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Introduction
Globalisation can be considered as an opening of intercontinental borders to allow
flow of trade, immigrations, foreign direct investments and exchange of technology and
information. However, many authors and researchers view globalisation as a rise in
movement among humans, capital and products through many global boundaries.
Globalisation was first derived from a Greek word ‘Globe’ that means worldwide. Later, this
got developed and started reflecting the integration of international and national economies
through capital flow, trade and migrations. It can be noted that high rate of inter-linkages and
interdependence among different nations is been occasioned by speed of cultural, social,
economic and political interactions that can define globalisation in more specific way. At
present, globalisation is considered as very complex and multifaceted phenomenon due to
continuous growth seen in global companies where they need to understand the reason behind
selection of appropriate international managers who poses skills and knowledge required to
manage global firms effectively (Edwin & Okpara, 2015).
Global managers are the ones who runs and develops international firms and requires
working under various international positions, and to stay ahead of the game, they play
interpersonal roles to coordinate and make interactions with employees alongside providing
direction and instructions. Offshoring and outsourcing are another element that can be related
to globalisation process in which international firms hires external organisations to perform
business functions in other country like developing or manufacturing products. Offshore
outsourcing builds new trend within business management at a global scale and are based
upon entrusting and performance of activities in those entities where the registered offices are
situated in foreign nations (Rzepka & Hławko, 2016). Though such activities bring various
opportunities and advantages to the global firms, they come with additional challenges also

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for which international companies hires best managers and forms global management style
that can tackle problems effectively to remain competitive.
Main body
How does globalisation impact contemporary businesses”?
Okoye & Nwaigwe (2015) asserts that in recent times, the increase seen in integration
of world economies have resulted in expansion of international trade and commerce. The
world economy has been linked with each other due to the globalization that have made many
firms develop portfolio investments like purchase of stocks via foreign investment,
international loans and direct investments making in multinational corporations. These
multinational or global firms try to sell and manufacture their products in different parts of
the globe reflecting little or no differentiation in their home product. Furthermore, foreign
trade has escalated as nations became more concentrated regarding peace, stability and unity
along with well-being of people globally than concentrating upon themselves only. Such
global impacts have led the world into one global village with international businesses
encouraging organisations to adopt franchising, outsourcing and offshoring activities.
Information technology is one of the reasons due to which globalisation have been converted
into reality. Most of the conversation made in global firms are facilitated through information
technology. For instance, a person sitting in Australia can discuss business related issues with
his/her colleague sitting in America as if they are situated in same locality. Globalisation
along with information technology have made the world a concentrated place where every
industry can be connected with each other whenever required (Samimi & Jenatabadi, 2014).
Edwin & Okpara (2015) claims that globalisation can have bad impacts upon
businesses as very often, the underpinning regulation on commercialisation, privatisation and
deregulation comes packaged with international trade organisations like World Bank and

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World Trade Organisations which do not consider socio-economic idiosyncrasies of the
nations. They apply one method fit for all that ultimately does not prove well for most of the
companies and unfortunately, the privatization process is often marred by crude politics,
corruption and insincerity. This shows that without considering cultural viewpoints and host
country participation, foreign companies cannot establish effective industrialisation.
Moreover, rise of unfair distribution of wealth in every facet, shape and form shows that
global wealth is becoming unfair, or economic globalisation have widened the gap between
poor and rich nations globally.
Developed countries company try to remain in superior position and sustain their
profitability that gives rise to terrorism in developing or under-developed nations in the form
of violence, resulting not only the loss of lives, but also loss seen in country economies.
Though globalisation has opened new doors to wider markets and employment opportunities,
the disproportion seen in the development of nation economies and unstructured employment
further rises disparity at global scale. Nevertheless, Štefko & Sojka (2015) claims that
organisations which are heavily impacted by globalization, whether due to outsourcing or
supply chain or presence in global marketplace significantly increase their profitability.
Despite globalization has many negative impacts, its positive sides must not be overlooked
that have made many countries increase overall work efficiency and provided with enhanced
remunerations to the people. However, to maintain impacts of globalization over the firms, it
is significant to select global managers after considering skills and knowledge in them that
can lead global firms in positive and sustainable way (Morkertaite & Sekliuckiene, 2014).

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Essential skills required for managing global firms
Ananthram & Nankervis (2013) claims that, “Global managers need skill sets that
facilitate efficient and effective functioning in the complex and dynamic global business
environment” (p. 301). The challenges related to globalization compels global mangers
developing appropriate skill sets to operate successfully in global economy. According to
Kyaw, Harland, & Mujtaba (2017), leadership is the key element in all organisations but its
capacity and function are becoming more complex due to increased involvement of
technology development and globalization. Technological advancement have extended the
possibility of global economy that changed the way people used to do businesses in earlier
days. To stay ahead of the game, international managers need to understand importance
behind looking world as both, a challenge and opportunity for individual development and
organizational growth. Additionally, the authors pinpoints that to cope with changes, global
firm’s management need to make swift response to the impacts of globalization,
demographics and technology and hence, they must offer job role to specific skills that
reflects approach towards global leadership, continuous learning and work ethic. The
competitive landscape in 21st century highly depends on abilities and skills of leaders and
thus they need to poses skills that can manage cultural diversity and implement business
strategies to promote effective workforce capabilities.
Ananthram & Nankervis (2013) argues that the dimensions of skills required in
managing international organisations are associated with mindsets that are present within the
organisations as well as its individuals. To address organisational dimension, research made
by the authors reveals that global managers objectives remains focussing upon representing
themselves in front of foreign country Board of Directors or ones who are present in superior
positions. Any lack or barrier seen while making communication can affect overall process
involved in team-building and implementation of innovative ideas as suggested by

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international affiliates. Therefore, most of the researchers gives emphasises upon managerial
dimension in leadership role and argues that leaders with managerial mentality can prove to
be a significant component in corporate global visibility. This reasoning can be linked with
managerial global mindset study made by Bucker & Poutsma (2010) that demonstrates an
association between behavioural, cognitive and existential factors that potentially helps in
setting integrated and complex structures to represent multiple strategic and cultural realties
in both local and global levels.
Bucker & Poutsma (2010) claims that organizational system where individual
capabilities are considered as primary component that can serve as an alternative to job-based
system, facilitate development of individual capabilities that can lead organisations towards
competitive edge. This viewpoint can resemble personality and that competition always
include individual intent or behavioural repertoires to provide organisations with effectual
functions including recruitment, selection and developing high performance teams.
Moreover, the contemporary and ever-changing business needs have made organisations
recognise the value behind workforce and how they are been directed which can be made
possible only if global managers adopt skills and techniques developed out of management
theory and practice. Although, in global firms many managerial capabilities are been
invented, continuous research made by global leaders can make them accustomed with new
technology and techniques related to planning, networking, budgeting and controlling.
Outsourcing and offshoring contribution to globalization
Globalization, outsourcing and offshoring are often used for demonstrating the current
global economy as a high-tech international village. The development seen in ICT and global
networking have made organisations work freely, irrespective of distance thereby resulting in
effective management of cross border businesses. Bulajic & Domazet (2012) defines

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outsourcing as “moving a business function performed inside of an organization to a third-
party business function provider” (p. 1322). Accordingly, any production or service that is
been accomplished from outsider another organisation and is mandated by host organisation
to be a part of it is called outsourcing of business function. Offshore outsourcing is another
term which states outsourcing business function to cross border countries. Outsourcing
outside the home country borders are known as near shoring outsourcing and offshoring
outsourcing in which near shoring outsourcing occurs when both the organisations are
situated in nearby country locations or belongs to neighbourhood countries. Such kind of
outsourcing can provide organisations with various advantages like economic development
and benefitting political, linguistic and historical factors by getting closer control and reduced
transport expenses in both the organisations.
According to Rzepka & Hławko (2016), offshore outsourcing is gaining much
recognition these days as it is been driven out of many factors that have made various
companies utilise outsourcing benefits into their core business strategies. Such drivers may
not emphasise upon cost related factors only and consider speed and flexibility in delivering
business solutions, ongoing productivity development, access to new skills and technology
along with training and development advancement for employees. As compared to offshore
outsourcing, offshoring can prove more beneficial as it provides companies with many
financial advantages and favourable economic conditions which is why it has become current
trend in the process of globalization in businesses. Furthermore, offshoring has provided
companies and nations with various implications concerning balance between demand and
supply side of marketplaces that presents an opportunity for MNC’s in creation of more
values in lesser costs. Thereby, boosting productivity for global economy by giving
organisation access to international resources and allow them in improving management

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quality and business operations to increase overall organisational productivity (Rzepka &
Hławko, 2016).
Arguably, Stojanov (2017) reflects upon negative side of outsourcing and offshoring
and states that application of such functions in organisation can lead to reduced participation
from employees’ perspectives and incapability to adapt corporate values and possibility to fit
into work atmosphere other than their own teams. This makes many service companies
realise adverse effects or limited access to benefits from outsourcing offshoring that can lead
in development of unfavourable situations and negative consequences. Moreover, many
outsourcing companies can serve the clients that does not reflect the principles of loyal
partners and suppliers may act adversely by providing degraded products that can make the
organisation fall into stakeholder’s criticism and breakdowns. Offshoring often requires
making applicable agreements and may contain hidden costs levied upon both the parties
which further leads to renegotiate and implement conditions during the earlier phase of
agreements. Consequently, such hidden costs and degradation of products or services can
lead to failures while meeting economic expectation and organisational performance. Hence,
most of the authors and researches suggested that before undertaking outsourcing and
offshoring activities, they must consider both advantages as well as advantages behind it or
else may have to face various challenges in future (Ojukwu, Mason, & Orole, 2015).
Case study
Headquartered in California, Apple Inc. is one of the leading computers and mobile
manufacturing company that follows outsourcing strategy to get its products manufactured in
developing countries manufacturing units. Apple products include variety of software related
products, mobile and computers, applications and digital content including some famous
products like iPhone, Mac and Apple watch. The products are been sold worldwide in

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Apple’s retail stores, online media and through direct sales force along with other third-party
suppliers, wholesalers and value-added retailers. The business strategy of the firm reveals that
it is mostly based upon geographical considerations in which most reportable segments
include Europe, Asia-Pacific, America, China, Middle-East and other neighbouring countries.
Substantially, all the hardware’s of the company are been manufactured by its outsourcing
partners located primarily in Asian countries while some of the Mac products are
manufactured in home country, America. Manufacturing and supply of various Apple
products are performed by sole-sourced outsourcing partners in Asia, Europe and America
(Apple Inc., 2017).
In global outsourcing, technology and electronics suppliers are bound to compete with
each other to meet ever-changing demands in process, quality of products and timely
distributions. While managing businesses in global level, companies are expected to generate
effective wage structure and consider waste and health related issues that usually affects their
profit margins. It can be argued that outsourcing factories are rarely provided with enough
financial support that can enable them with corporate social responsibility related programs,
rather they face additional costs and slashed profits by squeezing their own labour force
(Chan, Ngai, & Mark, 2013). If Apple’s competitiveness lies in combination of technological
innovation, corporate leadership, design and marketing, the financial success of the firm is
indispensable from the company’s globally dispersed network suppliers that are mainly
situated in Asian regions. One major issue faced by the company while showing dependence
towards outsourcing partners is risk identification due to sharing of critical data with
manufacturers and third-party suppliers. Although the company have taken various measures
to secure their confidential data, such measure faces issues many times and any leakage
makes the firm face significant losses due to unauthorised accesses. Such evidences can

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adversely affect company’s reputation, operation results and financial outcomes (Sherman,
2012).
The fact that most of the manufacturing functions are outsourced to global countries,
it cannot be fully taken against company’s interest as it provides Apple with both effective
and efficient manufacturing processes with reduced costs. In fact, the time saved by the
company due to avoiding factory maintenance work, Apple can concentrate entirely upon
other significant matters like research and development, innovation of new products and
designs along with strategic marketing. Outsourcing lays various opportunities in front of the
company especially while maintaining agile supply strategy and lean supply chain, depending
upon industry trajectories and market requirements. Full control over outsourcing partners
and suppliers is another notable feature of Apple’s globalisation strategy that exemplify the
production of its famous products along with development seen in existing products and other
applications (Pineda, 2017). Specifically, Apple engineers designs the hardware and software
for its products that are further directed to its outsourcing manufacturing partners in which
processing and connecting every component are looked over by the firm itself which ensures
product quality and control. The availability of Chinese labour in reduced costs in
comparison with American labour further helps the firm in reducing significant product costs
and gain economies of scale through production (Cassidy, 2012).
One biggest problem faced by Apple while considering globalisation and outsourcing
of its manufacturing and selling function is increased government intervention and restriction
in certain areas to protect and maintain national interest, intellectual property rights and
security. The legal system and law in European and Asian countries shows limited
outsourcing abilities that can create impacts over product quality through outsourcing. Due to
lack of skilled labour, high technology products take more than anticipated time in
manufacturing processes which indirectly raises product costs. Moreover, huge number of

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documents and agreements made between the company and its outsourcing partners can
increase the chances of missing important information that converts into issues in issues in
future. While most of the third-party manufacturers remain loyal to the firm, benefits
provided by competitive companies can mislead them effectively that results in facing
product issues and delayed production many times. Apple created suppliers code of conduct
in 2005 that requires all its suppliers to provide safe working conditions in the factory and
treat workers with respect, dignity, ethically and fairly along with showing environmentally
friendly practices while manufacturing Apple products and services. However, the Foxconn
factory case in 2006 broke this code of conduct that led Apple fall into public criticisms and
face tremendous loses at global level (Arteaga, 2016).
Conclusion
The rapidly changing business environment has created new challenges for the firms
who seek to expand their business activities outside their home countries. On the other hand,
global changes can prove to be market accelerators through which new ideas are born and
globalisation brings solution for many global firms who respond to changes and enables
quick response for getting entered in foreign market through effective entrepreneurial
activities. Therefore, global managers require certain skill set that can facilitate effective and
efficient functioning of global organisations. The above report also identified that outsourcing
and offshoring have received tremendous response in recent years as it proves to be best
suitable model that helps global companies in managing resources and for optimising quality
in their business processes. However, outsourcing and offshoring may come with additional
challenges and issues that requires to be handled tactfully. Such notion has been generated
after analysing case study of Apple Inc. outsourcing function in which the company faced

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many advantages and disadvantages, however with tactful management and strong leadership
was able to maintain the competitive position in the market at national and international level.

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