Apple Business Model and Corporate Social Responsibility - Assignment Example

Apple Business Model Names Institution Affiliation Q1. Apple business model and Corporate Social Responsibility A business model is a description of business operation more, so it involves business components, functions and revenue power (What is Business Model? definition and meaning, no date). Apple Inc is a technical company that is located in the USA. It deals with designing, development and selling of consumer electronics, software, and computers among other accessories. It is considered as number one company in innovation worldwide. Apple Inc reached its bottom rock in the year 1997 when its revenue failed drastically by 36% within two years (Business Innovation Model, 2010). Apple business model affects direct shareholders as well as moving markets. Apple Inc. is an entity to emulate on its accomplishment and organization. With its decision of letting Steve back to the company, and removal of Mac OS, its future is now very bright unlike in the earlier revolution. With deSteve’s departure the fall of the company was very rapid, despite some attempts during his absence to change Apple’s business mode of operation. Apple uses ‘Own the consumers’ business model. This model is intended to drive consumers into their systems and then hold them and has enabled Apple Inc to be successful and make them have huge power in the supply chain. Apples Inc model has enabled it to maintain the low-cost strategy while at the same time maintain the high price profit and their customers. This is achieved by introducing high switch cost. Apple Inc ensures that their online contents are played only on their devices. This approach helps maintain apples digital market share which in turn increases the volume of devices sold therefore increase in profit. To use Apple’s or Mac operating systems, you need to host a Mac because it is the only device where this particular operating system can run. This is referred to as "monopoly" A state in which a single person or a company owns whole or nearly all of the market to a given type of product/service (Investopedia.com, 2003). When such happens, the company operates without any competition whatsoever (that is for vast economies of scale, a hindrance to entry, and or governmental regulation among other challenges). These types of institution hence produce much less than the amount that would maximize “social welfare”. Apple has always provided this type of experience. If you buy hardware from Apple Inc the operating system, basic applications that you use must be done by Apple. Apple Inc owns a music library where they sell audio and video content. iPod became very popular before the store had gotten off the ground. Apple Inc only allowed the iPod to use the Digital Rights Management for its music incorporation iPod. Other users had no alternative in terms of where to buy their soft/audio/video online content. Apple does not own all digital music players available in the market. However, they may have the best, but as long as there are competitors in the market, there is no monopoly. In this case, Apple is not a monopoly; it just has gained market dominance through public choice. Apple Inc created and made a new working system and changed the world. Before the company, there was no legitimate market at all for online music; at least not one had done in a way that users needed it. Despite Apple Inc is being successful; it lacks in terms of Corporate Social Responsibility (CSR). Corporate Social Responsibility is a form business obligation that is included in a business model. Most innovations are not captured in Apple Inc business model. Most of Apples Inc products are outsourced. There have been a few cases of how their supplier’s workers are working under very poor conditions. For example, employees at Foxconn’s Shenzen plants were forced to work overtime to an extent some of them began to commit suicide. Apple founder Steve Jobs believed that equipping public with the best technology was more worth it than being involved in corporate charity. Apple Inc is trying to address CSR by insisting on their suppliers to not employ children and to improve their employees working conditions. Q2. Effects of Apple Apple’s ability to own the customer gives them an advantage in that it enables them to have loyal customers in this case with designers, programmers among others. Apple’s ability to have control over their products and customer processes gives them an advantage. They have been able to they develop a simple, customer-oriented, smoothly operating platforms as that of iTunes. It also has designed competence, amongst these; Apple’s strong synergies between its products give it an added advantage over others. This normally exists between iPad, iPhone, iPod, iTunes and application store. A customer is offered a simple interface that attracts more customers hence giving them an advantage over others. The main negative effect of Apple Inc model is that, if you want to use its hardware you are forced to use it with their software. They dictate prices of their products, and once you buy their hardware, you have no other option rather than to buy their software. Apple Inc outsources their products from China which bring it at a spotlight because it is believed that these companies mistreat their workers; this may lead to their brand being undermined with time. Apple has not been able to adopt a sophisticated category management scheme that may allow a more strategic use of the retail landscape (Montgomerie and Roscoe, 2013). Apple stakeholders are employees, customers, and suppliers. In any business it is not possible to satisfy all stakeholders. In apple Inc, stakeholders that win are their employees and customers. Apple’s customers are external stakeholders, and they are very important, this is because they buy their products leading to them making profits. Apple employees are internal stakeholders. They are treated well, and they have a say on what happens in Apple Inc. They are also treated well, like for example they are provided with food on their eatery, and they don’t have to wait in queues (Heather, 2012). Suppliers are external stakeholders of Apple Inc. Suppliers lose in this situation because their interests are different from those of Apples Inc. This is because there are claims that some of their suppliers have poor working conditions and employ children in their firms. This is causing conflict between Apple and suppliers as it is against the law to employ children. It is not possible for Apple Inc to satisfy all its stakeholders at the same time. This is because all stakeholders have different interests. Q3. My opinion on whether I should invest in Apple Inc To me, Yes, I would invest in Apple Inc. This is because of its closed ecosystem gives it a competitive advantage over other companies. The income generated by Apple is quite high compared to respective companies with different commodities hence possibility of higher earnings. The ability of Apple Inc to innovate not only with the new gadgets shows that it will continue to grow. Apple can redesign and rethink how people consume digital content. They also understand how we transact business by the introduction of Apple pay. Apple pay is a digital wallet that is found in their latest devices, for example, iphone6 among others. Another reason I will choose to invest in Apple Inc is because of its leading profit margins of the hardware. Apple Inc also have customer who are loyal to their products. Apple Inc ensures that their customers are satisfied. This has a benefit to them as satisfied customers will always market their product hence increase in sales. These are the reasons as to why I will greatly invest in this Apple Inc. Q4. Whether society is in a better place with companies such as Apple Inc Society is not in a better place operating with such monopoly companies as Apple. A person should have a choice in the type of a product that he or she chooses. In this case, Apple devices and software are only compatible with each other. This is a challenge to consumers because they do not have a choice but to buy another product from Apple no matter the price. For example, for you to use their digital wallet you have to buy their latest iphone6 meaning that if you have an android phone you cannot use this service. Apple can exploit their customers. By regulating such companies, a customer will get value for his or her money. The concept of monopoly interferes with the personal budget as the company might exercise irregular fluctuations in prices of their products. Their lack of Corporate Social Responsibility is also a problem. Apple Inc has failed to manage how workers are treated in their Chinese suppliers. Apple Inc is concerned with their profit and not the working condition of their supplier’s employees. They keep the largest part of profit and fewer shares to their workers. They should be investigating their suppliers before they engage with them in business. By doing this, they can understand their supplier’s employees working conditions and whether kids are involved. It is also important for them to give back to the society by doing charity works. Reference list Business innovation Model (2010) Available at: https://www.capgemini-consulting.com/resource-file-access/resource/pdf/Business_Model_Innovation.pdf (Accessed: 3 September 2015). Heather, B. (2012) Brad Heather. Available at: http://stakeholdersofappleandasda.blogspot.co.ke (Accessed: 7 September 2015). Investopedia.com (2003) ‘Monopoly Definition’, in Available at: http://www.investopedia.com/terms/m/monopoly.asp (Accessed: 6 September 2015). Montgomerie, J. and Roscoe, S. (2013) ‘Owning the consumer—Getting to the core of the Apple business model’, Accounting Forum, 37(4), pp. 290–299. doi: 10.1016/j.accfor.2013.06.003. What is Business Model? definition and meaning (no date) Available at: http://www.investorwords.com/629/business_model.html (Accessed: 6 September 2015). Read More