Apple - India
-
Upload
deepa-bisht -
Category
Documents
-
view
79 -
download
0
Transcript of Apple - India
![Page 1: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/1.jpg)
By: Michelle Bielak, Wally Henriquez, Sean McNeil, Alex Ogozaly, Elizabeth Rubino, Kevin Sullivan
![Page 2: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/2.jpg)
APPLE INC.
PARENT COMPANY OVERVIEW
Name: Apple Incorporated
Location: Cupertino, California
CEO/ President: Steven Paul Jobs
Company Annual Revenue: $65.2 billion (Fiscal
year ended September 2010)
Number of Employees: 49, 400 Employees
(Fiscal year ended September 2010)
Type of Business: Electronics, Entertainment
![Page 3: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/3.jpg)
APPLE’S MISSION STATEMENT
“Apple designs Macs, the best personal computers in
the world, along with OS X, iLife, iWork, and
professional software. Apple leads the digital music
revolution with its iPods and iTunes online store.
Apple reinvented the mobile phone with its
revolutionary iPhone and App Store, and has recently
introduced its magical iPad which is defining the future
of mobile media and computing devices.”
![Page 4: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/4.jpg)
PARENT ORGANIZATION CHART
Company CEO President
Steven Jobs
Hong Kong China, VP: John
Brandon
Milano Italy, VP: Pascal Cagni
Headquarters, California, USA
Sales Marketing Products
Music ElectronicsEducational
Programs for children/ adults
Games Software Engineering
Customer Service
Finance
Our Business Unit, New Delhi India
![Page 5: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/5.jpg)
GOALS IN THE NEXT TWO-YEARS
Company Annual Revenue: Increase revenue with new
products and updated product to 65million
Number of Employees: Increase the number of
employees in all departments and expand the number of
Apple Inc. stores location wide
The main concern of Apple in 2011 is to be environmentally
safe
![Page 6: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/6.jpg)
Enterprise Valuation
Profitability
Reduced Costs
Add Value and Raise Prices
Profit Growth
Sell more in existing Markets
Enter New Markets
Apple’s Strategic Positioning:
High Valued Electronics at a High Price
Increase Profit, reduce costs
Maximize Shareholder Value
Enter New Markets
![Page 7: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/7.jpg)
LABOR LAWS
“Workmen’s Compensation Act, 1923”
“Payment of Wages Act, 1936”
“The Industrial Disputes Act, 1947”
“The Minimum Wages Act, 1948”
“The Maternity Benefit Act, 1961”
“Payment of Bonus Act, 1965”
“Payment of Gratuity Act, 1972”
![Page 8: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/8.jpg)
FINANCIAL LAWS AND REGULATIONS
The Reserve Bank of India
“Banking Regulation Act, 1949”
Banking Companies Bill passed on August 9, 1969.
India Accounting Standards
SEBI established in 1988.
![Page 9: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/9.jpg)
INDIA LAW
Structure of the Indian Judicial System
Supreme Court, High Court, Courts of Civil Jurisdiction.
Based off of English common law.
Criminal law in India based on the Indian Penal Code.
Supreme Court recently grants right to counsel on
February 24, 2011.
Important to consider Hindu Law in India.
![Page 10: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/10.jpg)
IMPORTANT ASPECTS OF INDUSTRY AND
GEOGRAPHY
Price lower with cheap labor
Will population want to purchase
our products?
Indian Ocean
Great trade opportunities
77% of trade done by sea
![Page 11: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/11.jpg)
ECONOMIC AND FINANCIAL
CONSIDERATIONS Tenth largest in world (nominal
GDP)
GDP per capita in U.S. dollars expected to triple by 2020 (Goldman Sachs)
Population is young – key because of our innovative products
Time to invest is now (booming economy, great ROA)
Safe place to invest – not greatly affected by downturn
![Page 12: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/12.jpg)
POLITICAL CONSIDERATIONS AND
DEMOGRAPHICS
Shouldn’t be a problem politically
From 1991-2006, foreign investment increased from 150
million to 9.5 billion
Youngest workforce (large economies)
17.5% of world’s population
65% of population is below 35
![Page 13: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/13.jpg)
LABOR MARKET AND COMPETITION Lower standard of living, cost of
inputs decreases, cheaper wages
Labor force participation rate= about 400 million out of 1 billion
30 million in organized employment, 340 in unorganized (organized private sector – 3% of employment)
Compete directly with Microsoft
(PC vs Mac) We own everything else
![Page 14: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/14.jpg)
PARENT COMPANY/ STRATEGY
United States is Apple Inc parent country.
International strategy for international business.
Determined by cost of reduction and local responsiveness.
Does not need to customize their products or marketing
because it will raise cost overall.
Two Competitive Pressures
Cost of reductions.
Pressure of local responsiveness.
Global Standardization
Strategy
Transnational Strategy
International Strategy
Localization Strategy
![Page 15: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/15.jpg)
PARENT COMPANY/ STRATEGYOutsourcers face
Telecommunications
Information technology
Language barriers
Levels of culture dealing with our international business
corporate culture
each organization has a distinct culture that is passed on from the older to new members and determines their way of thinking, doing and living
with apple it would deal with the new upgrade of software and new gadgets they make
![Page 16: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/16.jpg)
CULTURAL DIFFERENCES Cultural Factors United States India
Religion Major religion is Christianity Majority of the population is Hindu as of
2001. many Hindus do not tolerate any
other religious differences
Education Universal with strong public education
system from kindergarten through
graduate schools. Most states require
schooling until the age of 18.
Only about 20 percent of the population
make it to high school and many don’t
even make it to college
Economics United states is market driven and
capitalistic. GDP in 2010 was at $14.5.
13% of our nation was below the poverty
line.
India is known as a BRIC country and has
one of the largest GDP, growing at a 8.2%
as of 2011.
Politics United States is a two party system. Based
off three branches, federal government,
executive judicial and legislative. It is
known as a stable country lead by a
President.
Politics of India are based off of the British
system and a multi-party representative
democratic republic. Giving the Prime
minister of India the power and the
president of India holds reserve powers
Family Family size usually 4 people Family size is usually about 5
![Page 17: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/17.jpg)
CULTURAL DIFFERENCES PART 2
Cultural Factor United States India
Class Structure Capitalist class structure Based on a Caste System
Languages English and Spanish Indo and Aryan and many speak
English as a 2nd language.
Natural Resources/ Geography made up of 50 states and over
3,717,813 sq mi of land that is
used for natural resources.
1.269 million square miles and
divided into 28 different states.
Much of the land is reserved of
oil and renewable water
resources.
![Page 18: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/18.jpg)
FOREIGN DIRECT INVESTMENT PLAN
Entry Strategy
Greenfield investment
Wholly owned subsidiary
Location and experience priorities
![Page 19: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/19.jpg)
FOREIGN DIRECT INVESTMENT PLAN
Funding
Inventory backed loansSeptember 25, 2010 September 26, 2009
ASSETS:
Current assets:
Inventories 1,051 455
Deferred tax assets 1,636 1,135
Vendor non-trade receivables4,414 1,696
Other current assets 3,447 1,444
Total current assets41,678 31,555
Long-term marketable securities25,391 10,528
Property, plant and equipment, net4,768 2,954
Goodwill 741 206
Acquired intangible assets, net342 247
Other assets 2,263 2,011
Total assets 75,183 47,501
![Page 20: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/20.jpg)
FOREIGN DIRECT INVESTMENT PLAN
Funding cont.
Discount incentives to intermediaries
Fronting loans
United States
OperationWorld Bank
India Wholly
Owned
Subsidiary
Deposit $1 Million Loan $1 Million
Pay 8% Interest Pay 9% Interest
![Page 21: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/21.jpg)
FOREIGN DIRECT INVESTMENT PLAN
Foreign Exchange Rates
Employment Benefits
INR Rs. 50 Rs. 100 Rs. 250 Rs. 500 Rs. 1000 Rs. 5000 Rs. 10000
USD $1.14 $2.27 $5.68 $11.35 $22.71 $113.55 $227.09
USD $1 $5 $10 $50 $100 $250 $500
INR Rs. 44.04 Rs. 220.18 Rs. 440.35 Rs. 2201.75 Rs. 4403.5 Rs. 11008.75 Rs. 22017.5
Indian Rupee (INR)
United States Dollar (USD)
![Page 22: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/22.jpg)
INTERNATIONAL BUSINESS METRICS
Great risk and potential
Achievable goals and accurate measurements
Key Performance Indicators
Alignment of all levels in organization
Choosing the correct KPIs
![Page 23: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/23.jpg)
KEY PERFORMANCE INDICATORS
![Page 24: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/24.jpg)
KEY PERFORMANCE INDICATORS
Market share
Overhead costs
Inventory Turnover
Profit Margin
Liquidity
Employee Retention
![Page 25: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/25.jpg)
EVALUATING SUCCESS
Achieving significant market share
Positive profits
Independent functioning
10% increase in customer satisfaction
80% employee turnover
![Page 26: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/26.jpg)
1
Michelle Bielak
Wally Henriquez
Sean McNeil
Alex Ogozaly
Elizabeth Rubino
Kevin Sullivan
APPLE INCORPORATED
PARENT COMPANY DESCRIPTION:
I. PARENT COMPANY HIGHLIGHTS:
Name: Apple Incorporated
Location: Cupertino, California
CEO/ President: Steven Paul Jobs
Company Annual Revenue: $65.2 billion (Fiscal year ended September 2010)
Number of Employees: 49, 400 Employees (Fiscal year ended September 2010)
Type of Business: Electronics, Entertainment
II. PURPOSE OF THE BUSINESS:
Apple’s Inc. is a multinational corporation designed to market electronics, computer
software and personal computers. The mission statement is, “Apple designs Macs, the best
personal computers in the world, along with OS X, iLife, iWork, and professional software.
Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented
the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its
magical iPad which is defining the future of mobile media and computing devices.” The purpose
of Apple Inc. is to provide the leading technology in electronics for its customers in the US and
worldwide. Their products are made to make life easier for their customers by combining
everyday technology. Employers are determined to catch the attention of the public and the
media. In May 2010, Apple surpassed Microsoft and became one of the largest companies in the
world. Apple Inc. has established a unique reputation for its customers. People count on Apple
because of its uniqueness and ever-changing electronic ideas. They employ over 49,400
employees around the world. There are jobs held in marketing, finance, retail, engineering, legal
rights, facilities, sales, and operations positions. Apple Inc. offers opportunities for all its
employees and its mission is to be the best it can for its employees and its customers.
III. ORGANIZATION:
![Page 27: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/27.jpg)
2
IV. PARENT COMPANY STRATEGIC PLAN AND GOALS:
2-year Goals:
Company Annual Revenue: Increase revenue with new products and updated product to
$65billion
Number of Employees: Increase the number of employees in all departments and expand the
number of Apple Inc. stores location wide
Type of Business: Apple is participating in the same industries but they are inventing new
electronics every year. Their ideas are top secret and are not released to the public.
Change Between Present and Two-Year Goals:
The main concern of Apple in the next two years is to be environmentally safe. Apple
has been criticized for not being a leader in removing toxic chemicals from its new products and
for not recycling its old products. Shareholders, customers, employees and the industry have not
been pleased with Apple’s policies in the past. Apple is looking to surpass its competition with
the improvements it needs to become ego friendly. Apple plans to decrease or eliminate several
of the dangerous chemicals from electronic products. Although these chemicals are in small
amounts, Apple wants to participate and do everything it can to keep the environment clean. For
example, “Apple became the first company in the computer industry to completely eliminate
CRTs. The effect has been stunning — our first CRT-based iMac contained 484 grams of lead;
our current third-generation LCD-based iMac contains less than 1 gram of lead.” Apple is not the
first company to go “green” but it is not the last and it is one of the first United States based
companies to do so. Apple is forcing rules and policies that all products must exceed too. In
order for this goal to be reached, Apple employees have been researching and developing new
techniques that will not affect our environment. One of the major environmentally safe goals for
Apple is that it plans to completely eliminate the use of arsenic and mercury by the end of this
fiscal year. With Apple’s plan to recycle and eliminate toxins, they will be number one in the
world for environmentally safe electronics, passing HP and Dell. Apple is improving everyday
Company CEO President Steven
Jobs
Hong Kong China, VP: John Brandon
Milano Italy, VP: Pascal Cagni
Headquarters, California, USA
Sales Marketing Products
Music ElectronicsEducational
Programs for children/ adults
Games Software Engineering
Customer Service Finance
Our Business Unit, New Delhi
India
![Page 28: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/28.jpg)
3
with its success of going “green.” As a company, we are delighted to say we will reach our goal
by the end of 2012.
V. INTERNATIONAL BUSINESS STRATEGY OF PARENT COMPANY:
When a firm decides to go international with
their business they must face many competitive
decisions. Two of the most important decisions a
company will face are the pressures for cost reduction
and pressures for local responsiveness. The pressure of
cost reduction forces a firm to lower their value of the
cost of creation. Firms can outsource to places where
costs of their products are much cheaper or they can
mass-produce a standardized product in one location. A
firm must have the feeling of local representation. Every
country has its own way of life. If a company does not
adhere to each country’s differences in traditional
business practices, distribution channels, and the
demands from the host government, there will be no
reason going international. Customers in different
countries all hold to their own ways of doings things. It
is important for a multinational firm to become aware of all traditions and rules in the countries
of entry.
There are four different strategies an international corporation can choose from. They are
global standardization, localization, transnational and international. Each strategy leads to the
deciding factor that firms will use to determine the amount of pressures for cost reduction and
local responsiveness. Global standardization is used to increase profitability by obtaining cost
reductions through economies of scale. A firm whom wants to pursue a low-cost strategy on a
global scale will normally offer a product that can be mass-produced at a low cost. A localization
strategy offers a product that is custom to the host country. The product satisfies the countries
preferences and taste. The third strategy is transnational. It is used when the firm is faced with
strong pressures for both reduction and localization. This strategy is hardly used when
competitors are in the market because it is hard for a firm to please the local tastes and
preferences of its customers at a low cost. The last strategy is international. This strategy is used
when firms are confronted with low pressures for both cost reductions and local responsiveness.
This strategy is scarcely used when competition enters the market. With each strategy, business
can find which one works best for their organization. Companies will decide to go international
depending on the country it chooses to enter and the amount of profit it can earn.
In corporate strategy there are two types of diversification, linked and constrained.
“Companies using linked diversification, enter new businesses when it relates in some way to
another business they are already in but it does not necessarily have any connection to their other
businesses. If they are using constrained diversification, they only enter a new business if it is
based on their core resources or competencies. Companies based on linked diversification have
little coherence to their overall corporate strategy, while companies using constrained
diversification tend to be more focused. Constrained diversification allows companies to
maximize the effect of their resources because they are shared (100).” Apple is a personal
computer, hardware and software company, inherently leading to use constrained diversification
Global Standardization
Strategy
Transnational Strategy
International Strategy
Localization Strategy
![Page 29: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/29.jpg)
4
because they utilize their competition and they share resources between businesses. For example
iPods, iPads, iPhones, MacBooks and Apple TVs all run on the same operating system. This
intends customers to link their music with laptops, TVs, cell phones and other Apple products.
This allows for a more appealing product to the customer. Apple is saving money by sharing
resources throughout their multinational business. The product of Apple has such a distinct
business that competitors have not been able to match their techniques. Each electronic device is
unique, allowing for them to be used anywhere in the world and each is different from any of its
competitors.
Apple’s goal for a mobile business is to be fundamentally innovated and differentiable. It
does not concentrate on the size of its industry because it maintains strong profit margins that
have high percentages in the industry’s profit share. Apple does not focus on the quantity of its
products but the quality and relevance. “. Peter Drucker wrote that “What makes the future
happen is always a business’s embodiment of an idea of a different economy, a different
technology, a different society. It need not be a big idea; but it must be one that differs from the
norm of today” (117). This means defining what the devices are (e.g., a pocket-sized device, or a
tablet-sized device), and what they do. Apple must do this through constant innovation.” Apple
has secured itself as the industry innovator and a position of strength by constantly defining what
their products are and what their products do. Since Apple is continuously redefining the
industry, they do not need an overwhelming market share. Apple can dominate the market
through their intelligence of inventing new electronics and the respect they have for their
customers.
Apple’s basic business model is to sell hardware; every other product, iTunes, Apps,
operating systems, is to make their hardware more valuable. The main goal of this strategy is to
maximize the value of the firm. Customers are willing to pay high prices to obtain products of
high value and high quality. Within an international business setting, firms are competing to
receive the highest profit against one another. Apple is competing at a differentiation strategy.
They increase the attractiveness of their products, making the products stand out so customers
will purchase their products over another.
Apple’s strategic positioning choice is to have high valued electronics that all customers
want. Apple products are unique compared to the rest of the world. This allows Apple to charge
a higher price. Many people are willing to buy Apple products because they are well produced,
have a high quality and are known as a luxury item to the customers of Apple. Apple’s main goal
is to maximize all values for the firm. This includes increasing shareholder value in a legal,
ethical and a socially responsible manner. “Managers can increase the profitability of a firm by
pursuing strategies that lower costs or by pursuing strategies that add value to the firm’s products.
Managers can also increase the rate at which the firm’s profits grow over time by pursuing
strategies to sell more products in existing markets or by pursuing strategies to enter new
markets” (Hill, 420). Apple is always looking at new ways to increase its value and shareholder
profit. Our main strategy to increase profit is to add value, raise prices and to enter new markets.
![Page 30: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/30.jpg)
5
VI. BUSINESS ORGANIZATION CHART
Enterprise Valuation
Profitability
Reduced Costs
Add Value and Raise Prices
Profit Growth
Sell more in existing Markets
Enter New Markets
Our business Unit, New Delhi
India
Sales Marketing Products
Music EletronicsEducational
Programs for children/ adults
Software Enigeering Customer
Service
Finance
![Page 31: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/31.jpg)
6
VII. INTERNATIONAL BUSINESS ISSUES
a. Labor laws
There are several different labor laws that will affect our plan to enter the Indian market. It is
important for us as a branch of Apple to understand the labor laws so that when we enter India
we won’t violate any of the laws that are currently in place. These labor laws will certainly have
an effect on our ability to run our operations in India. Different studies conducted on Indian
labor laws have shown that the Indian laws currently in place are highly protective of labor and
the labor markets are inflexible. All of the different labor laws set in place within India have to
be considered before we begin operations.
The Indian government has set in place several different labor laws that work to help protect
their citizens, gives Indian workers added benefits, and does diminish some of the interest in
deciding to invest in India. One important labor law currently in place in India is the
“Workmen’s Compensation Act, 1923”. The purpose of this law is to provide compensation to
an injured employee or compensation to the dependants in the case that a death takes place. An
employer will be forced to pay compensation if personal injury is caused to an employee because
of their employment. The employer will have to pay compensation to the worker if within 30
days of the injury or they will have to pay added interest or penalties to the injured party. An
employer is not liable if the employee is disabled for only three days or less. Also if injury or
death is the result of consumed alcohol or drugs or by disobedience to safety rules then the
employer is not liable to pay for the damages (Workmen’s Compensation Act, 1923). If there is
a disagreement about the payment of damages then the case will be brought before a
Commissioner who will bring down the final verdict in the case. This is definitely one law that
Apple has to be aware of when beginning operations in India as one of the employees could
eventually claim they deserve compensation due to injury and as a company we will be forced to
know the how this process plays out.
Another law that Apple Inc. must be aware of when entering operations in India is the
“Payment of Wages Act, 1936”. This act works to make sure that wages are paid to employees
in a timely fashion, without unfair deductions, in current coins and currency, and ensures that
employees have a place to file complaints about payment of wages. This act is important for
Apple to understand because it applicable to the employees of any factory, railway
administration, or industrial establishment and because we are looking to create factories in India
this law will pertain to our employees. The act enforces the policy that a company must pay
wages no less than once a month in the current local currency. The only acceptable reasons for
deducting pay from an employee are official fines, absence from work, damage to company
property, housing-accommodation, payment advances, income tax, and these deductions
approved by the employee (Payment of Wages Act, 1936). This act will make it so that we will
have to contact a local bank to make sure we have a substantial amount of local currency on hand
in order to be able to pay our employees. Another effect this act has on the operations is it shows
what offenses give us as employers the right to deduct from an employee’s pay check.
The labor law that probably has the greatest effect on our ability to start operations in India is
“The Industrial Disputes Act, 1947”. The main focus of this act is to protect the Indian worker
from the hardships of being layoffs. The most important aspects of the act are two amendments,
the first being made in 1976 and the second in 1982. The first amendment put into law a policy
that if firm employed 300 or more employees then the company must get permission from the
Indian government to start laying off employees and begin closing different plants. The second
![Page 32: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/32.jpg)
7
amendment in 1982 changed the 300 employee barrier to only 100 employees in a firm before
the company had to consult the government before layoffs and closing of factories (The
Industrial Disputes Act, 1947). This is a very important labor law for Apple Inc. to understand
before starting up operations because it as soon as over 100 employees are hired our company
will lose the right to decide for ourselves if we want to cut losses and start to both close plants
and begin the process of layoffs. The other important elements of IDA are compensation for
employees who experience a layoff and the elements of unfair labor practices. An employee will
have the right to compensation when experiencing a layoff if they have been working with their
respective company full-time for one whole year, and the compensation will be 50% of the
wages they had received when employed. The penalty for a firm committing unfair labor
practices is a punishment of up to six months imprisonment or a fine of one thousand rupees and
possibly both (The Industrial Disputes Act, 1947). These aspects are important for the company
to understand because they establish the punishments that will be enacted against a company for
violating certain workers’ rights.
The next labor law that will affect our operations in India is “The Minimum Wages Act,
1948”. This act’s purpose is to ensure that workers receive a minimum wage for their efforts. A
recent increase in the national minimum wage level has brought the new floor level nationwide
to an all time high of 115 Rupees a day. Much like in the United States this is the absolute
lowest minimum wage can be nationwide, however certain states inside of India can raise their
floor level to a higher wage than the national minimum wage. The only restriction is that no
state is allowed to go below the nationwide floor level of 115 Rupees a day, which would only
be about $2.60 a day (The Minimum Wages Act, 1948). While the fact that India has raised the
minimum wage to a new high may seem like a bad thing for a company creating factories in
India the fact remains that employment cost per employee can be as little as under $3.00 for a
whole day. Compare this to the United States where the federally mandated minimum wage is
$7.25 for just an hour of work. So there is clearly a competitive advantage for a company to use
Indian labor, especially when compared to the price of American labor.
One labor law that helps protect the rights of women workers in India is the “Maternity
Benefit Act, 1961”. This act helps regulate the employment of women in the workplace before
and after child birth and helps provide benefits for maternity. This law is consistent throughout
the whole country of India. In order to be eligible for the benefits, including maternal leave, the
woman must have been working for her employer for no less than one hundred and sixty days in
a twelve month period prior to expected delivery (Maternity Benefit Act, 1961). Another labor
law that is important to understand is the “Payment of Bonus Act, 1965”. This act works to
provide bonuses to people have directly helped a company gain profits through their
productivity. The minimum bonus that can be paid to any employee is 8.33 per cent of the
employee’s current salary or one hundred rupees, whichever one of the two is higher. While
some might view minimum required bonuses as a negative, they can also have a positive effect
in motivating the employees to be more productive. The final labor law that will affect our
ability to run operations in India is the “Payment of Gratuity Act, 1972”. This act will make sure
that an employee will receive a payment when they retire, resign, or are disabled if they have
maintained continuous service for a period of no less than five years (Payment of Gratuity Act,
1972). This law will play an important role in the employment decisions of the company
because firing an experienced employee could potentially hurt the company in two forms. The
first would be the fact that the company will be forced to pay the gratuity fee and the second way
![Page 33: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/33.jpg)
8
in which it could potentially hurt the company is the fact that they are losing an experienced
employee who has knowledge of how the company is run.
b. Financial Laws and Regulations
There are several different financial laws and regulations in India that must be considered
before beginning operations in India. All of the different financial laws and regulations will have
different impacts on how we will be able to undertake our operations in India. The Financial
system in India is much younger than in many of the other large economies and is not quite
caught up to the more advanced economies.
One of the most important financial institutions in India is the Reserve Bank of India which
is the central bank of the country. It was established in April 1935 and then was nationalized in
1949 with the “Banking Regulation Act, 1949”. The reason that the Reserve Bank of India was
created was to regulate banknotes, maintain reserves to help stabilize the monetary supply, and
operate the credit and currency systems. The main function of the central bank is to issue the
different bank notes, the Reserve Bank of India is the only financial institute that has the power
to issue bank notes in India. Currently the bank is required to hold a certain of gold and foreign
exchange reserves in a system that is referred to as the minimum reserve system (Reserve Bank
of India). Another important function of the Reserve Bank of India is to act as a banker to the
government. It makes loans and advances to the States and local authorities and it also acts as
adviser to the Government on all monetary and banking matters. The next power that the bank
has is the ability to lender of last resort to other national banks (Reserve Bank of India). Finally
the bank is controller of credit, which means it is able to change the amount of credit which is
created by the banks in India by changing the bank rate. An important banking law is the
“Banking Companies Bill” which was passed on August 9, 1969, this bill helped nationalize 14
major banks and really helped the banking industry in India grow in a way in which the country
would prosper from (History of Banking in India).
Another important aspect of the financial regulations in India is the Indian Accounting
Standards. The accounting standards are used to create common accounting policies and
practices throughout the country. The first act that helped bring Indian accounting standards to a
higher level is “The Companies Act, 1956”. This law was the first in India that required
financial statements should, “…give a true and fair view of its financial position and working
results” (Indian Accounting Standards- A Perspective). Accounting standards help to create both
appropriate accounting treatment of business transactions and also creates greater market
transparency and market stability. On April 21, 1977 the Accounting Standards Board, ASB,
was created to help make common accounting practices and to help integrate certain
international accounting standards into the Indian accounting system. One of the groups that
influences the ASB is the Securities Exchange Board of India, SEBI. The main objectives of
SEBI are to protect the interests of investors in securities, promote development in the Securities
Market, and regulate the securities market (SEBI).
c. Political Laws, Common Law, and Statuary Law
India is made up of a union of states and a secular, democratic republic with a Parliamentary
system of government. Much of the government is based primarily off of Britain’s
Parliamentary government system. The capital of India is New Delhi and this is where the
federal government of India is primarily located (Political Structure). The judicial system in
India is made up of a Supreme Court, High Court, and Courts of Civil Jurisdiction. The Supreme
![Page 34: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/34.jpg)
9
Court is the highest level court in the country and its rulings override the decisions made in the
courts below it. In India the Supreme Court is made up of a Chief Justice and then no more than
25 judges who are appointed by the President and will serve until the age of 65. The High Court
is the highest level of a state’s judicial court systems and has a good deal of power. The Courts
of Civil Jurisdiction are the ones on a local level who take handle smaller local cases (Political
Structure). This judicial system set up is based off of England’s common law structure where
judges determine the law through their decisions in court. Criminal law in India is based off of
the Indian Penal Code which has been in place since 1860. One recent decision handed down by
the Indian Supreme Court is the “right to counsel”. On February 24, 2011 the decision was made
to give criminal defendants in India the right to counsel (Zeldin). This is a very important
decision made to increase the liberties afforded to the citizens of India, but it does show how
India is still decades behind some of the other advanced countries. The final aspect of law that
must be considered when operating in India is Hindu Law. Hindus make up approximately 83%
of India’s population so any company coming into India must respect Hindu Law (Population of
India). Hindu Law is becoming less important in current day India as modernization occurs, but
Hindu Law which refers to a system of personal laws is still a topic that a company should be
aware of (Aspects of Hindu Law in Indian Society).
d. Things important to your particular industry/business
We have to determine whether or not India is going to want to purchase Apple products
and have the money to do so. Apple’s products are on the high end relative to prices of other
electronics. However, with cheap labor we will be able to price these lower than usual. Also,
India’s economy is booming right now therefore the citizens will be willing and able to buy our
quality products.
e. Things Important to your geographic and environmental interests
India’s geographic location leads to considerable trade by sea with other countries. Quite
obviously, it is located right on the Indian Ocean and this leads to great trade opportunities with
countries around the world. Also, about seventy seven percent of India’s trade is done by sea.
Apple will benefit greatly from their geography and location because of the easy access to the
ocean and other surrounding countries. We can export our product and import goods with
relative ease. India exported 201 billion in goods and imported 327 billion in goods. This shows
how much trade they do and the ease at which they do it. India’s geography and location
provides a huge benefit to Apple and its operations.
f. Economic Considerations
Currently, the economy of India is the tenth largest in the world by nominal GDP. In
regards to purchasing power parity, India is fourth in the world. According to economy watch,
India’s economy will grow by 8.43 percent in 2011 which is sixth in the world. India’s economy
is obviously growing at a rapid pace. As a result of this, we expect our business to thrive there.
According to Goldman Sachs, India’s GDP per capita in U.S. dollars will quadruple from 2007
to 2020. Also, they state that the Indian economy will exceed the United States by 2043 in U.S.
dollars. Although they may continue to be a low income country, they can continue to help drive
the world economy if they fulfill their potential. India’s retail sector is flourishing as well. This
will help out Apple significantly. However, there are a few economic challenges to doing
business in India. We must pass through many regulations regarding real estate. Also,
management may be more difficult in India because they are loss skilled. These may drive our
![Page 35: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/35.jpg)
10
costs up but overall India’s benefits far outweigh the costs. India is also a considerably young
country. Apple’s products are new and popular and trendy with younger adults. Consequently,
the youth in India will be inclined to purchase our products. These are all great benefits to doing
business in India.
g. Financial Considerations
India is a country that is currently in the midst of rapid development. This means doing
business over there will not be as expensive. However, it also means Apple will have to develop
with the economy. This is not a problem because we believe the country’s upside is absolutely
tremendous. Because India’s economy is starting to boom and grow rapidly, businesses are
investing long term there. They are doing this because they know they can get favorable returns
because the economy is growing so much, India was not as affected by the economic downturn
as other countries were. This makes it pretty safe for Apple to go in and do business there and at
a relatively low cost. Domestic and foreign investors believe India to be a very secure place for
investment because of its balanced profit and loss approach. It is tough to lose money in India.
There are definitely a few other things to consider about India. However, their growing economy
and relatively safe investments make it an easy decision to do business in India considering
Apple’s finances.
h. Political Considerations of working in India
When doing business in another country, there are always many factors to take into
account. A largely important factor to consider is the country’s political factors and risk. In
certain countries, a company may have to pay off politically powerful entities in a country before
the government allows it to do business there. The need for certain fees and bribes is much more
prevalent in closed totalitarian states than in open democratic societies. In our case, India is a
democratic society so fees would not be much. Along with political costs that accompany doing
business in another company such as India, there also political risks as well. Political risk is, “the
likelihood that political forces will cause drastic changes in a country’s business environment
that adversely affect the profit and other goals of a business enterprise” (Hill 77). In countries
experiencing social unrest and disorder, political risk is considerably greater. Risk is also greater
in countries where the underlying nature of a society increases the likelihood of social unrest.
Social unrest can be seen in certain events such as violent conflict, strikes, terrorism, and
demonstrations. This unrest is usually found in countries with more than one ethnic nationality.
IN these countries, competing ideologies are battling for political control. India has one ethnic
background so I do not think social unrest should be a problem. India welcomes foreign
investment as evident by the increase from 150 million in 1991 to 9.5 billion in 2006 (Hill 73).
Since 1991, India has happily welcomed investment by foreign enterprises. Doing business in
India will not have any political risks.
i. Workforce Demographics
India’s workforce demographics are extremely interesting. They have the youngest
workforce among large economies and this is very important for growth. A young workforce
means more motivation to work hard. They will also be more technological savvy which is
critical for our company. With India’s economy already thriving, their workforce demographics
will only add to the value of doing business there. However, these young adults do not have the
education that they should have for young people. On the other hand, India has enough young
![Page 36: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/36.jpg)
11
people and technological people to help us succeed. India’s young workforce may hurt them as a
country in the future but right now, it will be extremely helpful to our business. India contains
17.5% of the world’s population and is projected to surpass China by 2025. 50% of its
population is below the age of 25 while 65% of the population is below the age of 35. These
numbers are all very promising for Apple in India.
j. Labor Market
The labor market is defined as an informal market where workers find paying work,
employers find willing workers, and where wage rates are determined. The labor market in India
will be extremely promising. There will be no problem finding educated workers as evident by
the workforce demographics. Apple will have to find willing workers and determine a wage rate.
These educated workers will make good money because we are a successful company. However,
India’s standard of living is lower than that of America’s. Therefore, our cost of inputs will be
lower and we will be able to pay them cheaper wages. India’s labor force participation rate is a
low 400 million of a 1 billion population. The majority of the labor force is unorganized
employment at 340 million while the other 30 million is organized employment. 269 million
people are below the poverty line. 13% of the labor force is in manufacturing. This is where our
company will do the majority of its work. And of the organized employment, 26% is in
manufacturing. We can pay low wages. Our employment will be organized as unorganized
employment is full of low productivity. The organized private sector only makes up 3% of
employment. This is what Apple will fall under. There are many other regulations and rules we
will have to deal with in the labor market but it looks very promising.
k. Competition
Apple is such a dominant company on the rise right now. Competition is not a particular
thing to be worried about. However, we will have to deal with Microsoft. Microsoft is the
biggest American based company in India that we will have to deal with. We directly compete
with them on many items and the sales of computers being the most important. We already own
the market as far as digital devices go such as the iPod, iPad, and iPhone. However, the personal
computer is a different story. Mobile operating systems account for nearly 3% of internet traffic
and that number is doubling every eight months or so. This is due to the increased number of
iPhones and Ipads out there. There is no denying Microsoft’s dominance of the PC. However, we
will be able to compete with them with our macbook and hope to gain a good percent of the
market. This is important but the bulk of our sales come from our other digital devices and we
dominate the market with that. Therefore, competition in India will not be a huge concern for us
as we feel wherever we go we will succeed. On the contrary, we will have to deal with Microsoft
though.
VII. IMPACT OF PARENT COMPANY’S INTERNATIONAL BUSINESS POLICIES
The impact of the parent company’s international business policies is dealing with all future
foreign units, which would lead us to have a good team of employees. Apple in India would
make us go internationally and would have to insure that the international business is in
compliance with already existing company strategies and goals.
Apple is known to retain approximately the same strategy for our products worldwide. Apple
is based in the United States and is known as a global standardization strategy for their
international business. By acting upon the global standardization Apple does not need to
![Page 37: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/37.jpg)
12
customize their products or market them different internationally, because if they did it would
raise the prices of cost. Also, Apple would have to be aware of the country regulations for
international business. For example, in India it’s dealing with national security, protecting jobs
and industries and human rights.
In the United States to outsource a company, the company is going to face significant
investment in telecommunications and information technology to prove an offshore presence.
Nevertheless, larger companies can better take advantage of economies of scale to offset high
fixed costs, which leads the company larger than smaller. There are two competitive pressures
that a company trying to go internationally would face which are known as cost of reductions
and pressures of local responsiveness. Cost of reductions would change because being based of
a strong economy in the United States the price has to vary from country to country to be able to
attract the majority of a population to the product. Pressures of local responsiveness is being
able to make more of a profit on each unit of production and being able to use different sources.
It is said that your business success will greatly depend on your understanding of the cultural
differences in the region it tries to expand to. Apple is based in the United States as stated before
and has various culture factors and ways of working compared to India. There are about 8
Cultural Factors that affect a company, which are religion, education, economics, politics,
family, class structure, languages, and natural resources/ geography. For example, most of the
United States population is known to practice Christianity as their religion. The education system
in the United States is universal with strong public education from kindergarten through graduate
school; in many states it is required schooling until the age of 18. For many young adults in the
United States they need a high school diploma to have a paid job, compared to India when a
child can work as young as 10 years old. The Economy of the United States is known to be
market driven and capitalistic. The countries GDP level in 2010 was 14.5, but yet 13 % of our
nation is still below the poverty line. Politics in the United States is broken into a two party
system and also made up of three branches the federal government, executive judicial and the
legislative, these branches have lead the United States to be known as a stable country lead by a
President. The regular family size is about four people per household. The class structure in the
United States is hard to examine because it’s an open class structure with opportunities for
anyone to advance and move up. The language in the United States is English but many are
starting to speak Spanish. Lastly, the United States natural recourses and geography is made up
of 50 states and over 3,717,813 square miles of land that is used for natural resources.
In the United States many companies measure their success through goals, cost to the
business, business retention, employee capacity, market shares. Apple trying to expand to India
is going to have to be very cautious as to how it adapts to all the cultural factors and policies in
India versus the United States. Below are a few of the cultural considerations Apple will need to
take into account in its new India operations.
Cultural
Factors
United States India
Religion Major religion is
Christianity
Majority of the population is Hindu as of
2001. many Hindus do not tolerate any
other religious differences
![Page 38: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/38.jpg)
13
IX. FOREIGN DIRECT INVESTMENT
Apple, Inc. will make a greenfield investments in India as their capital investment plan.
Greenfield investments may be more risky, but the return from successful operations will be
high. Luckily Apple, Inc already has a worldwide notable brand image, so there is less risk for
failure. Direct investment in India will decrease the costs associated with transportation and trade
barriers which normally limit a country from exporting (260). Our strategy is to create
opportunity for India and make sure benefits outweigh the costs.
After initial entry into India, we plan to operate as a wholly owned subsidiary, in which
we own all stock in the company. In choosing an entry strategy we looked at the advantages that
were relevant to our business goals. Our technological competence gives us a competitive
advantage with the products we make for customers, and we would like to remain in control of
that upper hand. Products like the Mac and iPod have unique qualities that set themselves apart
from other brands. In the United States, the Apple brand is dominant for both consumers and
business to business (Ribitzky, 2011). We want to transition this demand to the investment in
India, and having a wholly owned subsidiary where we can remain in control of the technical
specs will allow for an easy transition.
Education Universal with strong
public education system
from kindergarten through
graduate schools. Most
states require schooling
until the age of 18.
Only about 20 percent of the population
make it to high school and many don’t even
make it to college
Economics United states is market
driven and capitalistic.
GDP in 2010 was at $14.5.
13% of our nation was
below the poverty line.
India is known as a BRIC country and has
one of the largest GDP, growing at a 8.2%
as of 2011.
Politics United States is a two party
system. Based off three
branches, federal
government, executive
judicial and legislative. It is
known as a stable country
lead by a President.
Politics of India are based off of the British
system and a multi-party representative
democratic republic. Giving the Prime
minister of India the power and the
president of India holds reserve powers
Family Family size usually 4
people
Family size is usually about 5
Class Structure Capitalist class structure Based on a Caste System
Languages English and Spanish Indo and Aryan and many speak English as
a 2nd language.
Natural
Resources/
Geography
made up of 50 states and
over 3,717,813 sq mi of
land that is used for natural
resources.
1.269 million square miles and divided into
28 different states. Much of the land is
reserved of oil and renewable water
resources.
![Page 39: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/39.jpg)
14
In addition to tight control over the operations in India, Apple can also meet their location
and experience priorities which can be costly in other countries. India is known to be a tech
savvy location, and this will provide value for us. Indian employees might have skills and ways
of doing things that are more efficient that the United States operations. It will be the
responsibility of our expatriate manager to recognize these talents and bring forward the value of
this skill to the company (432).
Funding for our investment will come from multiple channels. Apple has a large amount
of liquidity in with its inventory which can be used to back a loan. Inventories in the 2010
balance sheet amounted to $1,051 million (see chart below). Assets are increasing dramatically
and inventory alone has more than doubled over the past year. This makes up a small percentage
of their total assets which shows that there are multiple places that we can use liquidity. Because
we are a wholly owned subsidiary, we will not be using any stockholder’s equity to fund the
business, and a lot of the startup costs will have to be funded internally.
CONSOLIDATED BALANCE SHEETS (In millions, except share amounts) September 25, 2010 September 26, 2009 ASSETS: Current assets:
Inventories 1,051 455 Deferred tax assets 1,636 1,135 Vendor non-trade receivables 4,414 1,696 Other current assets 3,447 1,444
Total current assets 41,678 31,555
Long-term marketable securities 25,391 10,528 Property, plant and equipment, net 4,768 2,954 Goodwill 741 206 Acquired intangible assets, net 342 247 Other assets 2,263 2,011
Total assets $ 75,183 $ 47,501
A second strategy to fund the investment will be to give a discount incentive to
intermediary companies who want to sell our products. This should not take a lot of convincing
to companies since the demand for Apple products is already high. A company like Best Buy
could serve as an intermediary. We can offer a lower price to them so that they can make a profit
selling the product at a higher price.
We will be dealing primarily with banks in India who in turn will have to deal will banks
in the United States. Our plan is to receive a letter of credit from that bank to finance large costs.
Once we get the letter of credit, we can enter contracts with other companies and get bills of
lading to get the goods. There are multiple people involved in this way of financing the
company. Apple wants to be known as a company with good credit, meaning that repayments are
on time and all parties involved are satisfied.
The third and most common way Apple will have funding is through fronting loans. This
is a loan between the parent company and its subsidiary which comes from a large financial
intermediary (696). Unlike a direct intrafirm loan where the parent company loans to its foreign
subsidiary and is repaid later, an intermediary bank is involved in the process. Our plan is to take
a loan from World Bank. In the fronting loan, our parent company will deposit an amount in the
bank and World Bank then lends the money to our operation in India. The advantage to this loan
![Page 40: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/40.jpg)
15
is that it is risk free for the bank since it has collateral already. Both entities will have to pay
interest, so the bank makes a profit (687). India tends to have strict rules when it comes to FDI,
so this type of loan will prevent problems with foreign exchange rates or the capital inflow
source. The chart below describes the entities involved in the fronting loan.
Deposit $1 Million Loan $1Million
Pays 8% Interest Pays 9% Interest
Looking at the exchange rates between the United States and India is crucial in
determining our cash flows. India uses the rupee as its currency. Below is a chart of the
conversion rates as of April 10, 2011 between India and the United States. As you can see, 50
rupees equals about $1.14. One thing that businesses have to look out for is fraudulent money
which circulates when people buy from unauthorized currency exchange dealers. Apple will be
dealing with the bank for exchange rates, but they must be cautious in any petty cash
transactions.
Indian Rupee (INR)
INR Rs. 50 Rs. 100 Rs. 250 Rs. 500 Rs. 1000 Rs. 5000 Rs. 10000
USD $ 1.14 $ 2.27 $ 5.68 $ 11.35 $ 22.71 $ 113.55 $ 227.09
United States Dollar (USD)
USD $ 1 $ 5 $ 10 $ 50 $ 100 $ 250 $ 500
INR Rs.
44.04
Rs.
220.18
Rs.
440.35
Rs.
2201.75
Rs.
4403.5
Rs.
11008.75
Rs.
22017.5
FDI in India will bring many employment benefits to the country. Because they have
such a large population, many people will be looking for employment. Apple wants to fit in with
the Indian culture, so having employees from India will help smooth the transition. We can offer
lower wages to citizens of the country because the cost of living is lower in India than in our
parent country. Job creation is a positive influence for India to allow us to invest.
X. International Business Metrics
As we focus on expanding business internationally, especially in India, there is both great risk as
well as great growth potential for our operations. One of the major challenges we face as we
expand is the need to evaluate performance and accurately measure results. Business metrics will
play an important role in this evaluation process of our international business operations. We feel
United States
Operation World Bank India Wholly
Owned
Subsidiary
![Page 41: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/41.jpg)
16
that it is particularly important both to set achievable goals and have the ability to accurately
measure our progress along the way.
The primary method in which we will measure our progress toward the achievement of
specific business objectives is through Key Performance Indicators, or KPI’s. According to Kent
Bauer, managing director or the Performance Management Practice at GRT Corporation, KPI’s
are “quantifiable metrics which reflect the performance of an organization in achieving its goals
and objectives.” One of the many positives of using key performance indicators is that they align
all levels of an organization to ensure that everyone is operating under the same strategic plan.
By using these indicators, both management and their employees are able to point to specific
goals and objectives that are actually quantifiable, not simply a task which “came from above.”
The success of implementing such a plan is entirely contingent on selecting the correct
performance indicators which suit both the short and long term goals of the company’s strategic
business plan. Because of the vitality of selecting the correct performance indicators, there are a
few key challenges that we will face when selecting our KPI’s. Among the most important
include how many indicators should we have, who is accountable for these metrics, and how do
we ensure that the metrics reflect strategic drivers? Bauer also stresses the importance of
strategic alignment in the creation process of Key Performance Indicators. Below is the strategic
pyramid we used when determining our KPIs.
More than any other measure, we are particularly concerned with costs in our business.
Because we are in the business of making electronics, it is imperative that we keep overhead
costs down in order to maintain a healthy profit. One of the challenges we face expanding to
India is the adjustment to overseas costs. Mostly likely we will be hiring ex-patriots to be
managers of our new business in India, and as a result we will incur significant costs sending
them and their families overseas. It is imperative that we eliminate all unknown variables in our
cost equation in order to accurately project both our future earnings potential and hidden
![Page 42: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/42.jpg)
17
expenses that could be incurred due to our inexperience in the global marketplace. Often times,
these expenses, although seemingly small, can add up to huge sums and result in net losses on
the income statement. It is our responsibility to maximize and increase shareholder value to the
greatest of our abilities.
Another important indicator used to evaluate our performance is inventory turnover.
Inventory is a key issue in the international business environment because like in the United
States, inventory stuck on the shelves is a huge cost to the business. In a world where technology
is constantly changing and evolving, customers are seeking the newest product or gadget.
Therefore, our company must be careful to not overstock products in our retail stores because
most likely, a newer and more innovative product will be introduced a year later. Keeping good
control over our inventory levels will lead to a higher profit margin, another of our key
indicators. By focusing on keeping costs down, we will in turn produce a higher profit margin for
our shareholders. Liquidity is also an important indicator we will use. In order to be successful as
an international business, we must have the necessary amount of cash to make investments and
pay our expenses. As a result, we must watch our liquidity ratios to ensure that we both we have
the amount we need for daily operations, but also not keeping too much cash, which could be
invested and earn a higher return than sitting in a savings account. Finally, employee retention is
important to management and our business. Spending the time to train employees is expensive
for any business, so we will work hard to retain hired employees as well as performing thorough
background checks on new employees to sure that we are hiring people of high integrity and
honesty. By doing this, we are putting procedures in place to protect ourselves from a high
employee turnover rate and the associated costs of having to train another set of new employees.
XI. EVALUATING SUCCESS
Ultimately, we will have to look at ourselves in the mirror and evaluate the job we have
done in India. While there are many factors to consider in this evaluation process, one of the
biggest we will consider is our market share among Indian citizens. If we can gain 30-40%share
in the first year of business and then 10-15% increases in each following year, we will dominate
the technology market. And considering Apple’s global presence in countries worldwide, we
believe that these goals are fully attainable. We are also looking to post positive profits in each
year, while maintaining a current ratio of 2:1. This will ensure that we stay in sound financial
standing when dealing with our creditors in the case that we might need a loan to finance a
specific business objective.
We would also like to be fully independent from direct corporate influence within three
years of our existence. It will obviously take a significant amount of help from corporate to get
the operation off the ground; nevertheless, we are hoping to create sustainable profits so that we
have the ability to run the India unit efficiently and effectively. Customer satisfaction is also
extremely important to our business environment, and as a result we would like to see a 10%
increase in customer satisfaction for the first six years of operation. By establishing a stable and
loyal customer base, we are then able to sell more products to a greater amount of customers who
know and trust our product.
Finally as mentioned above, we would like to maintain at least an 80% employee
retention ratio in the first three years of business. Doing so allows us to build employee morale,
keep rehiring costs low, and groom domestic managers in the business. We feel as though all of
these objectives are both realistic and achievable by setting the tone at the top of the organization
![Page 43: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/43.jpg)
18
for a corporate culture of ethics and compliance. By following our strategic vision and following
through on our key performance indicators, we are ensuring that our India operation will be both
sustainable and profitable.
XII. EXECTUIVE SUMMARY
Apple’s mission statement is, “Apple designs Macs, the best personal computers in the
world, along with OS X, iLife, iWork, and professional software.” , Which shows that apple
cares for their customers and their commitment to innovate what today’s technology can make
possible. Apples success can be seen through their annual revenue of $65.2 billion dollars for the
fiscal year of 2010. Apple has tried to make it their purpose to provide the leading technology in
electronics for customers worldwide. The corporate structure is headed by company CEO and
President Steve Jobs and headquartered in Cupertino, California. Apple. has established a unique
reputation for its customers. People count on Apple because of its uniqueness and ever-changing
electronic ideas. The international business strategy the parent company uses is to maximize the
value of a firm by high prices and high value. Apple’s basic business model is to sell at high
prices because customers are willing to pay to obtain the products of high value and high quality.
Due to the large size of the venture in India, an international business strategy will be used,
because the products of apple are universal meaning the product can be easily used worldwide
with change of language.
In the marketing planning for the next two years the main concern for apple is to become
environmentally safe and become ego friendly. Apple plans to decrease or eliminate several of
the dangerous chemicals from electronic products. Apple also wants to increase revenue with
new products and update products to 65 billion dollars. Also, increase the number of employees
in all departments and also explain the number of Apple Inc. stores location wide. In addition to,
Apple is looked into several key laws in India including the major labor laws, banking
regulation, accounting standards, the Indian judicial system.
The Apple brand is dominant for both consumers and business to business (Ribitzky,
2011). Nevertheless, apple wants to transition demand to a Greenfield investment in India and
have a wholly owned subsidiary where apple can remain in control of the technical specs to
allow for an easy transition. Apple is going to need to meet the location and experience priorities
of India, which can be very costly.
There are several ways in which Apple would be fund their investment which would
come from multiple channels such as Inventory backed loans, giving a discount to intermediary
companies, fronting loans from world banks. Lastly, some key consideration for FDI plan is
foreign exchange rates from the Indian ruby and the United States dollar. Nevertheless, FDI
would bring some new employment rates to India and FDI would help the growing economy.
Key Performance Indicators are crucial in measuring Apple’s success in India. By
evaluating and measuring market share, overhead costs, inventory turnover, profit margin,
liquidity, and employee retention, Apple will have measureable results in which to evaluate the
business. It is important to keep costs low in the expanding business environment in India, and
by doing so Apple will create a sustainable and profitable business with a large market share.
![Page 44: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/44.jpg)
19
Work Cited
“APPLE INC (AAPL:US): CEO & Executives - BusinessWeek.” Investing & Stock Research by
Company and Industry - BusinessWeek. 26 Apr. 2011. Web. 26 Apr. 2011.
http://investing.businessweek.com/research/stocks/people/people.asp?ticker=AAPL:US
“Apple Inc. | Company Profile from Hoover's.” Hoovers | Business Solutions from Hoovers.
2011. Web. 2 Mar. 2011. http://www.hoovers.com/company/Apple_Inc/rtjcci-1.html
APPLE INC. Form 10-K. EDGAR, Securities and Exchange Commission. Government of the
United States of America. 25 Sept. 2010. 21 Apr. 2011
http://www.sec.gov/Archives/edgar/data/320193/000119312510238044/d10k.htm
“Aspects of Hindu Law”. Date Accessed April 23, 2011. http://www.lexvidhi.com/article
details/aspects-of-hindu-law-in-india-454.html
Currency Converter. Yahoo Finance. Yahoo! 15 Apr. 2011
http://in.finance.yahoo.com/currencies/converter/#from=INR;to=USD;amt=1
“History of Banking in India.” Date Accessed April 23, 2011.
http://finance.indiamart.com/investment_in_india/banking_in_india.html
“India Labor Laws”. Date Accessed April 23, 2011. Website Updated March 31, 2011.
<http://www.export.gov/india/eg_main_018059.asp>
“India’s Labor Market: Case for Temporary Staffing Reform to Reduce Unemployment.” Team
Lease Services. 18 Mar. 2011.
http://www.teamlease.com/images/India_Labor_Market_White_Paper.pdf
“Indian Accounting Standards- A Perspective”. Date Accessed April 23, 2011.
http://www.icai.org/resource_file/9548Indian%20Accounting%20Standards.pdf
“Indian Maritime Trade, Geography of India.” Jupiter Infomedia LLC. 2011. Web. Accessed 1
Apr. 2011 http://www.indianetzone.com/37/indian_maritime_trade_geography_india.htm
Jobs, Steve. “A Greener Apple.” Apple's Goal. Steve Jobs, 1 Apr. 2011. Web. 22 Apr. 2011.
http://webcache.googleusercontent.com/search?q=cache:gik0dVEMswYJ:www.apple.c
m/hotnews/agreenerapple/+apple+inc+goals&cd=1&hl=en&ct=clnk&gl=us&client=safa
i&source=www.google.com
“Political Structure”. Date Accessed April 23, 2011.
http://library.thinkquest.org/11372/data/POLITICS.HTM
“Reserve Bank of India”. Date Accessed April 23, 2011.
<http://finance.indiamart.com/investment_in_india/rbi.html>
![Page 45: Apple - India](https://reader033.fdocuments.us/reader033/viewer/2022051400/54ff64b74a7959da6c8b45de/html5/thumbnails/45.jpg)
20
Ribitzky, Romy. The Apple of Business’ Eye. Portfolio.com. 25 Mar. 2011. Web. 11 Apr. 2011
http://www.portfolio.com/business-news/2011/03/25/apple-tops-business-journals
survey-of-top-25-brands
“SEBI (Securities Exchange Board of India)”. Date Accessed April 23, 2011.
http://finance.indiabizclub.com/info/securities_exchange_board_india
Schomer, Karine. “Culture Matters: Workforce Diversity in India and the US.” Sourcing
Magazine. 7 Mar. 2011 http://www.sourcingmag.com/content/c070212a.asp
Shah, Semil. “India’s Demographics: Favorable Today, Costly Tomorrow.” Harvard Business
Review. Harvard University. 28 Mar. 2009. Web. Accessed 24 Mar. 2011
http://blogs.hbr.org/cs/2009/05/indias_demographics_favorable.html
Zeldin, Wendy. “India: Supreme Court Ruling on Right to Counsel”. March 10, 2011. Global
Legal Monitor.
http://www.loc.gov/lawweb/servlet/lloc_news?disp2_l205402564_Criminal%20law%20a
nd%20procedure