CS: Global Spacial Organisation + Operation of Apple (a TNC)

Question 1

What is spatial organisation?

Answer 1

• where diff. activities (e.g. research + dev., manufacturing, + marketing/distribution) of a TNC are located

Question 2

Describe the spacial organisation of Apple.

Answer 2

• research + dev. operations occur at main HQ, located in Cupertino, California, USA, + also in European HQs, based in Cork, Ireland
• manufacturing of products, is often outsourced to manufacturing companies in NICs (e.g. Foxconn, a Taiwanese electronics manufacturer, located in Shenzhen, China)
• markets are primarily located in wealthy HICs (e.g. in Europe, N. America + Australia, w USA being the largest contributor to Apple’s sales, accounting for 44% in 2011), however Apple are focusing on shifting to emerging markets like India + China as well

Question 3

Explain why Apple’s HQ is located in Cupertino.

Answer 3

• bc Cupertino is located in middle of Silicon Valley (a global hub for technology innovation), so can easily collaborate w nearby tech giants (e.g. Google, Facebook + Tesla) + access a skilled workforce
• Silicon Valley also has many top uni.s located there (e.g. Stanford Uni which is only 20 miles from Apple’s HQs) so Apple can easily employ talented engineering + computer science graduates
• Cupertino is also connected to major transport networks (e.g. San Francisco International Airport), making it easier for employees to commute + for Apple to distribute products globally

Question 4

Explain why Apple’s manufacturing is often outsourced to companies in NICs.

Answer 4

• bc it has cheaper labour costs + large-scale operations, allowing them to produce devices at lower costs (enables cost savings for Apple)
• bc are located in countries w relaxed labour laws (so have fewer requirements for employee benefits) + envi. laws (so face fewer restrictions on pollution, waste + emissions, + can avoid fines + penalties)

Question 5

Explain why Apple’s markets are located in HICs + why they’re shifting to NICs.

Answer 5

• bc Apple produces high-end electronics, which are in strong demand in HICs, consumers in HICs are better able to afford them, bc have a high purchasing power, which helps Apple maximise profits
• Apple’s has focused on expanding to emerging markets, such as China, in which Apple is now 1 of the top smartphone brands w a market share of 18%
  
  • this is bc Apple’s markets in HICs are reaching saturation, leading to slower growth, + so emerging markets offer Apple new customers w growing incomes, + so an expanding potential for inc. sales

Question 6

What are the positive eco. impacts of Apple?

Answer 6

• Apple has made FDIs into many countries, + bc of its high status + success, it often attracts FDI from other TNCs, bringing further eco. benefits
• has created a wide range of jobs
  
  • directly: jobs working for Apple, in research + dev., or in retail, in which some are highly skilled + well paid (e.g. Europe: Apple employs 22,000 ppl)
  • indirectly: jobs created within Apple’s supply chain, like in component part manufacturing or in app dev. (e.g. Europe: Apple supports 170,000 jobs through suppliers)
  • at Foxconn manufacturing plant, 350,000 ppl are employed + wages are above min. wage + higher than in other parts of China
• by investing + creating jobs, Apple is creating a positive multiplier effect in host countries

Question 7

What are the negative eco. impacts of Apple?

Answer 7

• repatriation of profits, meaning profits made by Apple’s operations overseas, are sent back to home country (USA) + so money is taken out of host country’s economy
• criticism of workers wages in China (e.g. approx £2.20/hr compared to £27.00/hr in USA
• Apple has been accused of corporate tax avoidance
  
  • e.g. 2016: it was ordered to pay €13B in back taxes to Ireland, however it was rejected by an EU court in 2020
  • e.g. 2019: Guardian newspaper reported Apple had agreed to pay 10yrs of back taxes to France
• Apple exploits countries, such as China, who have relaxed labour + envi. laws, bc are cheaper, however this neg. impacts envi.

Question 8

What are the positive social impacts Apple?

Answer 8

• workers in countries where Apple directly employs ppl (e.g. USA + UK) are paid + treated well so enjoy a good standard of living

Question 9

What are the negative social impacts of Apple?

Answer 9

• in China, many have moved from R to U areas to seek employment w Foxconn, creating greater lvls of inequality between R + U areas
  
  • R areas lack investment + have poor service provision + dec. + unbalanced pop.s
• concerns ab. working conditions in Foxconn’s assembly plants, inc. poor working conditions, excessive working hrs + forced overtime
  
  • e.g. 2018: Guardian newspaper reported many worked >70hrs of overtime /month in violation of Chinese law
  • e.g. 2010 + 2011: several suicides among Foxconn workers bc of severe working conditions

Question 10

What are the negative envi. impacts of Apple?

Answer 10

• bc Apple’s manufacturing occurs in many countries w relaxed envi. laws, Apple avoids fines for hazardous chemicals used in manufacturing processes, which pose danger to workers + envi
  
  • e.g. 2018: contaminated wastewater from Apple manufacturing plants was discharged into public drains in China, affecting local water supplies + ecosystems
• relaxed envi laws enable elements (e.g. cobalt), which is used in batteries of Apple products, to be mined, creating toxic wastewater, polluting soils + affecting ecosystems

Question 11

Evaluation.

Answer 11

• spacial organisation of Apple is contributing to globalisation + has many positive impacts on many countries, however, it also has a range of issues that Apple are working hard to address
• over time, the spacial organisation of Apple is likely to continue evolving as tech advances + the global market changes
  
  • e.g. supply chains are likely to expand, to avoid over-dependence in countries like China, + inc manufacturing in emerging markets (e.g. India) where labour costs are cheaper
• globalisation is driving Apple to restructure global operations, production + distribution, so it has greater access to emerging markets, can operate more cost efficiently + spark innovation so it has greater competitive advantage

Question 12

Evaluation.

Answer 12

• R+D operations are located in HICs rather than NICs/LICs bc have a wider access to skilled labour, advanced tech + research facilities, + stronger infrastructure + innovation networks
• manufacturing is often outsourced to NICs bc have cheaper labour costs + a greater access to emerging markets, despite the neg. envi impacts
  
  • however, although majority of manufacturing is outsourced to NICs, locational advantages influence some TNCs to outsource to HICs w lower labour costs than other Western European countries