P1: Explain why two businesses operate in contrasting international markets.
In this report I am going to explain why Apple and McDonald’s operate in contrasting
international markets.
Exports businesses sell goods and services to other countries. When the UK sells a car
abroad, money flows into the UK and when a tourist visits the UK, money flows into the UK.
Importing businesses buy goods and services from other countries. If a UK business buys
raw materials from abroad, the money flows out of the UK. If a UK business buys the film
rights for a foreign film, the money flows out of the UK.
McDonald’s is an import business because it imports products from overseas. Apple is both
an export and import business because it buys products from China and sells their products
to multiple countries.
Multinational enterprises export and import goods and services between a range of
countries. They operate in more than one country and often operate in a number of
different markets globally. Multinational enterprises have to be very careful to adapt the
way that they trade to the different countries in which they are operating. Apple and
McDonald’s are both multinational businesses because they both operate in a variety of
countries.
Apple
Apple is an American multinational technology business that is
headquartered in the USA, California. They design, develop and sell
consumer electronics, computer software and online services. Apple
was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in
April 1976. The organisation operates in 25 countries and 510 stores,
including Australia, Brazil, Italy, Japan and Turkey. Their main
competitors include Samsung, Huawei, Xiaomi, and Oppo.1
The company renamed itself Apple, rather than Apple Computer. The change was made
when they announced their first iPhone on January 9, 2007. At the time, this was a
significant move, signifying Apple's move beyond being more than a computer company.
Not only do Apple sell computers and phones but they have also launched a watch,
television, iPod, IPad, air pods and MacBook in the past 20 years.2
The company sold 270,000 iPhone units during the first 30 hours of sales and the iPhone
was called "a game changer for the industry”. Apple’s worldwide annual revenue totaled
265 billion dollars in 2018. Apple is the worlds largest technology company by revenue and
is also the world's third largest mobile phone manufacturer after Samsung and Huwaei. In
August 2018, Apple became the first publicly limited US company to be valued at over
1 trillion dollars and just two years later in August 2020 became the first 2 trillion dollar US
company. The company employs 137,000 full-time employees. As of January 2020, more
1
https://www.idownloadblog.com/2018/07/03/howto-type-apple-logo-symbol/
2
https://whatis.techtarget.com/definition/Apple
,than 1.5 billion Apple products are actively used worldwide.
Apple works in the secondary and tertiary sector. They manufacture their own stock and
produce their goods at factories- this is the secondary sector. The final production is the
tertiary sector; this is the service Apple provides, such as selling the IPhone.
Apple has a hierarchical organisational structure,
with significant divisional characteristics and a
weak functional matrix. The hierarchy is a
traditional structural feature in business
organisation. The mobile market shares worldwide
in 2020 were as follows- Samsung with 31.04%,
Apple with 25.15%, Huawei with 10.73, Xiaomi
with 8.9% and Oppo with 4.69%. Apple has just
over a quarter of the mobile market share in the
world.3
Type of Markets Which Apple Operate in
Apple operates in emerging markets and developed countries. Emerging markets are
countries that have some characteristics of a developed market, but do not meet standards
to be a developed market. This includes the BRICS countries - Brazil, Russia, India, China, and
South Africa. These contain approximately 44% of the world’s population, meaning that
there is a huge potential audience for a business to target. As real GDP increases in these
countries businesses can target them with highly differentiated products. This is particularly
the case in more affluent areas such as Shanghai and Moscow, which have a higher
proportion of richer individuals.
Developed countries have high standards of living and well developed infrastructures. This
makes them easier to conduct business with better transport and communication systems.
Higher real GDP ensures that individuals have the purchasing power to buy high quality
products. However, there may be well established competition in these markets
Factors Influencing the Choice of Market
Choosing the markets to operate in needs careful thought because there are many things to
consider. The type of product may not be appropriate for particular markets or the cost of
exporting goods may be prohibitive to particular markets. The size of the market is a factor
which influences the choice of the market. All businesses need to consider how many
potential customers they will have in a particular market before deciding whether to enter
that market.4
Reasons for Apple Operating Internationally
3
https://research-methodology.net/apple-organizational-structure-a-hierarchical-
structure-that-may-change-in-near-future/
4
https://www.thebalancesmb.com/apple-retail-stores-global-locations-2892925
, Additional revenue streams
Choosing to sell goods or services in other countries also gives companies more
opportunities to generate revenue. New revenue streams are methods to generate new
income. Increased customer numbers lead to more different sources of revenue, e.g.
different countries. Apple’s subscription business grew 40% year-over-year. This revenue
comes from selling a range of services, such as iCloud storage services and apple music
subscriptions. Apple Music had 72 million subscribers worldwide in June 2020, up by four
million from December of the previous year. Apple Music is the second largest music
streaming service worldwide, competing with market leader Spotify.
Technological dominance
Being able to diversify and sell a good or service in more than one country spreads the risk
of any shock (such as a recession in one country). If sales in one country are bad, then you
can rely on another country's sales. Apple is the most dominant when referring to
technological products. In the decade since the iPhone’s debut, Apple has sold an average of
120 million devices per year. 10 years and 1.2 billion device sales later, the launch of the
newest line of iPhones is the most anticipated Apple product event since its initial release in
2007. More notable than the newest features or latest design is the fact that the iPhone has
retained its dominate position.
Diversification
Diversification means taking a new product or service into a new market. Diversifying helps
businesses to reduce risks as they will then offer different types of product or service.
Apple’s origins began with innovation and technical achievement through the Apple 1.
Apple designs a wide variety of consumer electronic devices, including the IPhone, IPad,
MacBook, Apple Watch and Apple TV among others. The iPhone makes up the majority of
Apple’s total revenue. In addition, Apple offers its customers a variety of services such as
Apple Music, iCloud, Apple Care and Apple Pay.
McDonald’s
McDonald’s is the largest international fast food restaurant, serving
over 69 million customers daily in 118 countries. It is a franchise
business and currently has franchised more than 80% of its
restaurants worldwide whilst the remainder is owned and operated
by the company.5
McDonald's is best known for its hamburger, cheeseburger and French fries. It was created
in 1940 by Richard and Maurice McDonald in California, where it was originally a hamburger
5
https://blog.logomyway.com/mcdonalds-logo-history/
In this report I am going to explain why Apple and McDonald’s operate in contrasting
international markets.
Exports businesses sell goods and services to other countries. When the UK sells a car
abroad, money flows into the UK and when a tourist visits the UK, money flows into the UK.
Importing businesses buy goods and services from other countries. If a UK business buys
raw materials from abroad, the money flows out of the UK. If a UK business buys the film
rights for a foreign film, the money flows out of the UK.
McDonald’s is an import business because it imports products from overseas. Apple is both
an export and import business because it buys products from China and sells their products
to multiple countries.
Multinational enterprises export and import goods and services between a range of
countries. They operate in more than one country and often operate in a number of
different markets globally. Multinational enterprises have to be very careful to adapt the
way that they trade to the different countries in which they are operating. Apple and
McDonald’s are both multinational businesses because they both operate in a variety of
countries.
Apple
Apple is an American multinational technology business that is
headquartered in the USA, California. They design, develop and sell
consumer electronics, computer software and online services. Apple
was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in
April 1976. The organisation operates in 25 countries and 510 stores,
including Australia, Brazil, Italy, Japan and Turkey. Their main
competitors include Samsung, Huawei, Xiaomi, and Oppo.1
The company renamed itself Apple, rather than Apple Computer. The change was made
when they announced their first iPhone on January 9, 2007. At the time, this was a
significant move, signifying Apple's move beyond being more than a computer company.
Not only do Apple sell computers and phones but they have also launched a watch,
television, iPod, IPad, air pods and MacBook in the past 20 years.2
The company sold 270,000 iPhone units during the first 30 hours of sales and the iPhone
was called "a game changer for the industry”. Apple’s worldwide annual revenue totaled
265 billion dollars in 2018. Apple is the worlds largest technology company by revenue and
is also the world's third largest mobile phone manufacturer after Samsung and Huwaei. In
August 2018, Apple became the first publicly limited US company to be valued at over
1 trillion dollars and just two years later in August 2020 became the first 2 trillion dollar US
company. The company employs 137,000 full-time employees. As of January 2020, more
1
https://www.idownloadblog.com/2018/07/03/howto-type-apple-logo-symbol/
2
https://whatis.techtarget.com/definition/Apple
,than 1.5 billion Apple products are actively used worldwide.
Apple works in the secondary and tertiary sector. They manufacture their own stock and
produce their goods at factories- this is the secondary sector. The final production is the
tertiary sector; this is the service Apple provides, such as selling the IPhone.
Apple has a hierarchical organisational structure,
with significant divisional characteristics and a
weak functional matrix. The hierarchy is a
traditional structural feature in business
organisation. The mobile market shares worldwide
in 2020 were as follows- Samsung with 31.04%,
Apple with 25.15%, Huawei with 10.73, Xiaomi
with 8.9% and Oppo with 4.69%. Apple has just
over a quarter of the mobile market share in the
world.3
Type of Markets Which Apple Operate in
Apple operates in emerging markets and developed countries. Emerging markets are
countries that have some characteristics of a developed market, but do not meet standards
to be a developed market. This includes the BRICS countries - Brazil, Russia, India, China, and
South Africa. These contain approximately 44% of the world’s population, meaning that
there is a huge potential audience for a business to target. As real GDP increases in these
countries businesses can target them with highly differentiated products. This is particularly
the case in more affluent areas such as Shanghai and Moscow, which have a higher
proportion of richer individuals.
Developed countries have high standards of living and well developed infrastructures. This
makes them easier to conduct business with better transport and communication systems.
Higher real GDP ensures that individuals have the purchasing power to buy high quality
products. However, there may be well established competition in these markets
Factors Influencing the Choice of Market
Choosing the markets to operate in needs careful thought because there are many things to
consider. The type of product may not be appropriate for particular markets or the cost of
exporting goods may be prohibitive to particular markets. The size of the market is a factor
which influences the choice of the market. All businesses need to consider how many
potential customers they will have in a particular market before deciding whether to enter
that market.4
Reasons for Apple Operating Internationally
3
https://research-methodology.net/apple-organizational-structure-a-hierarchical-
structure-that-may-change-in-near-future/
4
https://www.thebalancesmb.com/apple-retail-stores-global-locations-2892925
, Additional revenue streams
Choosing to sell goods or services in other countries also gives companies more
opportunities to generate revenue. New revenue streams are methods to generate new
income. Increased customer numbers lead to more different sources of revenue, e.g.
different countries. Apple’s subscription business grew 40% year-over-year. This revenue
comes from selling a range of services, such as iCloud storage services and apple music
subscriptions. Apple Music had 72 million subscribers worldwide in June 2020, up by four
million from December of the previous year. Apple Music is the second largest music
streaming service worldwide, competing with market leader Spotify.
Technological dominance
Being able to diversify and sell a good or service in more than one country spreads the risk
of any shock (such as a recession in one country). If sales in one country are bad, then you
can rely on another country's sales. Apple is the most dominant when referring to
technological products. In the decade since the iPhone’s debut, Apple has sold an average of
120 million devices per year. 10 years and 1.2 billion device sales later, the launch of the
newest line of iPhones is the most anticipated Apple product event since its initial release in
2007. More notable than the newest features or latest design is the fact that the iPhone has
retained its dominate position.
Diversification
Diversification means taking a new product or service into a new market. Diversifying helps
businesses to reduce risks as they will then offer different types of product or service.
Apple’s origins began with innovation and technical achievement through the Apple 1.
Apple designs a wide variety of consumer electronic devices, including the IPhone, IPad,
MacBook, Apple Watch and Apple TV among others. The iPhone makes up the majority of
Apple’s total revenue. In addition, Apple offers its customers a variety of services such as
Apple Music, iCloud, Apple Care and Apple Pay.
McDonald’s
McDonald’s is the largest international fast food restaurant, serving
over 69 million customers daily in 118 countries. It is a franchise
business and currently has franchised more than 80% of its
restaurants worldwide whilst the remainder is owned and operated
by the company.5
McDonald's is best known for its hamburger, cheeseburger and French fries. It was created
in 1940 by Richard and Maurice McDonald in California, where it was originally a hamburger
5
https://blog.logomyway.com/mcdonalds-logo-history/
