The relation between politics and multinational corporations

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The relation between politics and multinational corporations is intertwined; both of them are affecting each other. Sometimes legal rules and regulations are so strict that they are affecting the import of Apple's products, and on the other side, Apple is also powerful enough to change relations between states. I will examine these theses in details.

We can illustrate the impact of Apple's policies on politics and governmental functioning if we take into account the case of security. Namely, consumers of Apple's product are worried whether their information are truly protected, arguing that this multinational corporation should protect any misuse, or unallowed control over their personal data.

However, one of the duties of every government is to protect its citizens, and by encrypting the messages of its consumers, Apple is doing one bad thing- it is limiting the power of adequate agencies to detect, follow, and capture criminals. Without the possibility to track the messages, videos or pictures saved on Apple devices, governmental agencies are having less chance to use these date as evidence in trials.

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While governments are trying to influence multinational companies to live "back door" for their justice departments, Apple is completely ignoring these worries, inventing the systems that are almost impossible to decrypt: "Unlike our competitors, Apple cannot bypass your passcode and therefore cannot access this data. So it's not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8."

Bryan Chaffin reacted to the Bloomberg report in which it was written that Apple "spent some US.

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9 million in lobbying efforts in the first three quarters of 2014, which marks a big increase, even if it's pocket change for a company as wealthy as Apple." These numbers should not be surprising, if we take into account that if the current state of affairs continues, US government would have decreased incentives to support one of its biggest companies, and that is, clearly, not in the interest of Apple.

Events that marked 2016 tell us that the political aspect of Apple as a multinational corporation is huge. For example, relations between the two world's powers- US and EU are pretty much tense, since Apple is arguing that EU regulations are treating domestic companies more fairly than Apple.

Many studies show that Amazon and Apple pay the most taxes of all companies in the world, so political changes could highly affect their income. Since EU' main targets are big companies such as Google, Amazon, Apple, they could easily raise their taxes, which could result in lower income for these companies. Nevertheless, there are other political determinants that could affect Apple.

A considerable piece of Apple's production has been reallocated to China, However, there are factories all over the world, and probably one of the most serious problems Apple is facing, is supplying their factories with goods. China plays a crucial part in Apple's supply network. Apple, like many other companies, chose China, since it offers cheaper labor and raw materials. Now, with Donald Trump's promises, to raise taxes for China, things might change. That could make big companies, such as Apple, move back to the US. If Trump fulfills his promises, it is expected that China will raise labor and raw material costs, which will affect Apple's income.

Apple investigates India as mobile phone market, as India stands as world's third biggest smartphone market. However, Indian bureaucracy is a huge obstacle to the collaboration, and it is argued that it is better to use Indian potential in terms of skilled and cheap labor, and goods. In other words, instead of targeting the Indian market, Apple should base its production units there.

What we can see from abovementioned is that political factors cannot oversee those economical ones when it comes to the analysis of rise and power of multinational companies. That is why I will examine the economic aspect in the next paragraph.

Abhijeet Pratap is arguing that importance of economic factors in international arena significantly influence the rise of multinational corporations since the global business network includes "several economies whose performance jointly affects the brands' revenue and profits." Partap's ideas can be proved with the Apple.

The growth of Chinese and Indian market made China and India potentially big markets for Western companies. As economic performance rise, it globally results in higher purchasing power of the community which results in more sales, which leads to more profit. Speaking of Apple, prices tend to be higher than average, which leads to the conclusion that their products are not meant for lower end market. That is probably the main reason why India, is not the "iPhone" market. Generally, people still care about the prices, which surely affects Apple, and it will in the future, especially if China increase the costs of labor and raw material, as I mentioned in the part about political aspect.

The competition produced some new problem for Apple. Brands like Lenovo competed with them on the computer market, and in last few years, definitely made Apple lose a reasonable part of market. According to Sun Leo's research from 2014, "In addition to being the largest PC maker in the world, Lenovo is now also the second-largest PC/tablet maker and the third-largest smartphone supplier. PCs are still clearly its core competency, but it will eventually rely on three key pillars of growth: PCs, mobile devices, and enterprise solutions, thanks to its acquisition of IBM's low-end server business.

Technological changes are an inevitable effect to technological giants such as Apple. Speaking of which, past years were an all known technological boom, which resulted in the dramatic market changes. Dramatic changes could result in Apple losing its place on the global Fortune list of most valuable brands. Google is behind Apple's back, seeking to take their position.

As the market has grown, the number of competitors also grew. Other cheaper companies such as Lenovo and Hewlett Packard, produced big problems to Apple's profit, by keeping their place on the market and making Apple lose their. Even though they lost a significant part of the computer market, growth in the mobile industry, forced Apple to win a big part in the mobile market. A new, fast growing, competitor in the smartphone market nowadays is Google, with their Nexus and Pixel mobile phones.

For the less developed market, such as Asian, the smartphone market is mainly covered by Google and Samsung, since a significant price difference is noticeable. A fast-growing number of competitors also resulted in the production of same level products, at lower prices. These competitors could also produce problems to Apple in the developed world market, since the price difference is noticeable even by the wealthier market.

What is sure, is that Apple is significantly contributing to the US economy, which explains in the great extent its political importance. Don Reisigner wrote for web portal Fortune, that Apple "has created 80,000 U.S. jobs directly. In addition, the company says it has created 450,000 jobs at third-party suppliers and another 1.53 million jobs in the, so-called, App Store ecosystem." Type of jobs financed by Apple varies, from manufacturing to financial services. Although some critics are arguing that Apple is not contributing enough to the USA economy since it doesn't pay enough taxes, we must take into account that if there was no Apple, around 2 million people would be without a job, and that would severely damage the American economy.

Another aspect of Apple's influence is that this multinational corporation is providing a platform for many creative start-ups, which could project their applications to consumers all around the world. Recently, it was published on Apple's webpage that "the US developers have earned more than $16 billion from the App Store since 2008." We can argue that Apple is, together with other technologically oriented multinational companies, refreshing and modernizing the whole technological aspect of the economy, not just by bringing food to the table of people who are working for them, but also creating new jobs by offering people to create something useful, and sell it. Just remember the famous game "Floppy bird", which was at the beginning available just for iOS, that literally earned millions, and became "addiction" of many people all around the world.

Updated: Nov 01, 2022

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The relation between politics and multinational corporations essay
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