Apple Inc.

Question 1

overview

Answer 1

• US BASED TNC for electronic tech
• headquarters in Cupertino, California
• largest IT company by revenue
• no 1 global brand by value
• 137,000 full-time employees
• over 510 retail/stores in 22 countries

Question 2

success factors for Apple

Answer 2

• stylish design
• marketing and branding
• innovation
• focus on mobility
• service ecosystem
• diversification as evolve

Question 3

apple spatial organisation

Answer 3

global design and production
- designed in Silicon Valley
- manufacturing outsourced to Taiwanese companies e.g. Foxconn with production largely in China
- Headquarters large in Cupertino, California

Question 4

spatial organisation- key locations

Answer 4

• USA: offices, research facilities, assembly plants, data centres
• Ireland: European HQ in Cork, employing 6000 workers (focus on iMac production and logistics)
• China: assembly hubs (Foxconn)- employs nearly 2 million workers
  Retail distribution:
• 511 retail stores globally
• 115 in Europe and Middle East, 42 in China

Question 5

why China for manufacturing?

Answer 5

• cost-efficiency : Low production costs + competitive contracts
• labour availability- skilled workers more willing to work for low wages
• incentives- Shenzhen’s special Economic zone encourages international companies

Question 6

positive impacts of Apples operations

Answer 6

• USA= employment of 90,000 ppl and expansion of facilities
• Ireland - 6000 jobs at Cork facility and 3000 in associated services
  —> enhanced local infrastructure and reputation of hosting high-tech firms —> 53 languages spoken by workers = cultural diversity —> boost to Irelands economy and job market

Question 7

negative impacts of Apples operations

Answer 7

• criticism of low wages and labor conditions of Chinese factories
• limited job creation in Ireland with most high-skilled workers from other EU countries
• allegations of tax avoidance in Ireland loading to legal disputes

Question 8

trading and marketing

Answer 8

• market predominantly in rich countries
• 45% product sales= in USA
• services revenue is increasing
• Apple has to pay to import products back to US due to trade war between US and China = heavy tariffs in chinese imports to US
• more investments in US domestic suppliers now to support US economic resurgence and less tariffs
• competition from Chinese smartphone Huawei
• Apple attempted to expand Indian market but unsuccessful due to cheap competitors

Question 9

changes over time

Answer 9

• suppliers required to meet strict standards of the Apple supplier code of conduct —> standards apply globally (workplace rights etc)
• funding for more access to educational opportunities for supplier employees and communities
• carbon neutral since 2020 and foam to become carbon neutral across entire supply chain by 2030
• working to improve conditions around mining communities
• recycle and reuse programmes
• all assembly sites of major apple products = zero waste certified
• transport more by sea rather than air and packaging shrunk

Question 10

code of conduct

Answer 10

• Juvenile worker protections- juveniles employed most be of legal age (18+) and workers must not overwork (workers week restricted to 60 hours) and have health and safety and hygiene
• need access to toilets and water, dining and dormitories should be clean and safe
• must follow environmental permits and minimise energy and pollution

Question 11

tax practices

Answer 11

• apple uses subsidiary firms in other countries to declare profits and pay lower tax
• 2014 US and EU claimed Apple received favourable tax treatment from Irish government = tension
• 2016- concluded Apple had received illegal state aid from Ireland and ordered them to pay unpaid taxes

Question 12

China- how many ppl do Foxconn employ

Answer 12

• employ 1.3 million employees working on Apple products and supports 5 million jobs in the country

Question 13

China- labour practices

Answer 13

• working conditions- most live on site in dormitories, shops etc
  Most= young, migrant workers who are working an average of 62 hours a week for around $300 a month (half of which is when up by living expenses)
  Excessive hours etc is poor
• health and safety- workers been exposed to toxic chemical used to clean products and sometimes earplugs and goggles aren’t available
• student and child labour- BUT apple now demanding contractors to limit student interns to just 10% of factories workforce

Question 14

China- environmental issues

Answer 14

• apple has a ‘Green my Apple’ campaign
  —> uses 100% renewable energy in facilities. US = Apple Energy discovered
  —> removes all OVC plastics and toxic chemicals from products
  —> promoted recycling of its products
• 2016- Apple issues a $1.5bn green climate bond —> dedicated to financing environmental projects

Question 15

Bangha Island, Indonesia

Answer 15

• raw material suppliers
• Indonesia mines provide 30% of worlds tin
• but miners work conditions are poor (1 person dies each week and relies on child labour)
  —> damages 65% if forests and 70% of coral reefs and river pollution
• Apple criticised for using poor subcontractors and tin from illegal mining —> BUT Apple claiming to fund a study in the situation

Question 16

Apple Park HQ, California

Answer 16

• dedicated to design green energy and future of tech

Question 17

Pegatron factory, Shanghai

Answer 17

• electronic manufacturing company that assembles iPhones
• many issues and concerns and working conditions in Shanghai’s factors
  —> no basic health and safety training, overlong hours ($1.50/ hour) and no acceptance to take days off
• Pegatron was used after Foxconn crisis where at Foxconn 18 ppl committed suicide due to working conditions and 14 died at manufacturing facilities
  —> BUT after Foxconn made effort to improve work conditions (used Apple code of conduct)

Question 18

where’s Apple trying to start production

Answer 18

• in India and have more sales in India they lowered prices to try and achieve this