Group 11 IMBD Paris : Multiculturalism: Good for the Bottomline and Your Gateway to Global Markets

In today’s highly competitive, volatile global marketplace, the most recent census figures offer compelling evidence that U.S. corporations, in their aggressive pursuit of overseas markets for their products and services, may be overlooking a multicultural consumer market gold mine in their own backyards.

New population estimates were recently released by the U.S. Census Bureau showing that, for the first time, the majority of Americans under the age of one are minorities. Or more specifically that white, non-Hispanic babies now make up less than half of the population younger than one. It’s part of a demographic shift that’s expected to create a minority-majority nationwide population sometime within the next 30 or 40 years. California, Hawaii, New Mexico and Texas have already passed that threshold at the state level.

The ethnic landscape of America’s cities has also changed dramatically in the past decade. Twenty-two of the 100 largest cities are now minority-majority cities. These cities include Boston, Memphis, New York City, Las Vegas, San Diego and Washington DC. Whites were the majority in those cities just 10 years ago. Similarly, the white population has fallen even further in several cities that already had white minorities in 2004, such as San Francisco, Los Angeles and San Jose in California, as well as Miami and Houston.

Statistically, Blacks, Hispanics and Asians represent over 30 percent of the United States population. Research indicates that these ethnic groups are the fastest growing consumer groups in the country and that, contrary to popular stereotypes, they are brand loyal, have tremendous purchasing power, and are growing increasingly prosperous. Black, Hispanic and Asian consumers have a combined income of more than $4.4 trillion. And that is not chump change.

Multicultural consumers notice companies who notice them, rewarding them with their business, loyalty and support. As the American marketplace grows ever culturally and linguistically diverse, it’s clear that any company that does not actively pursue multicultural customers is leaving money on the table. Further, the economic clout of these diverse consumers will only grow: the census predicts that in less than 35 years, people of color will account for almost half of the nation’s population.

These compelling statistics make targeting culturally diverse and immigrant consumers an imperative for American companies. However, companies hoping to reach these fast growing emerging markets merely by “casting a wider net” will sell themselves short. Message exposure doesn’t necessarily mean message receptiveness, particularly in today’s disruptive digital media marketplace. Only by taking the time to understand the unique cultural sensibilities of diverse markets will companies compete effectively in the 21st century.

http://www.huffingtonpost.com/colette-amphillips/multiculturalismgood_b_5240001.html

Apple Offshoring-Globalization Group 5, Paris

Since the development of globalization, offshoring has been a predominant factor in many large companies, especially in IT industry in US. Even we also focus on the disadvantages like US firms hasn’t led more US jobs, the risk, the difficulties on managing business processes. However, the offshoring has been an irreversible trend. Why isn’t more manufacturing taking place in USA? Apple’s answer: it is simple no longer possible to compete by relying on domestic factories and ecosystem that surrounds them.

Nowadays, the number of companies that have decided to offshore their production in emerging countries is still increasing. Thanks to a lot of positive effects for both parts, offshoring in the manufactured materials’ sector is rising since 20 years. At the opposite of the effects that people could imagine, the company which experiences offshoring can increase its domestic employment and improve the quality of its workers’ skills. On the other side, this partnership with SMEs in emerging countries contribute to their development and can play a important role in the country’s GDP. We will take the example of Apple, a billion-in-profit company ($37 billion for 2013) that has decided to offshore its production in the workshop of the world: China. The strategy of a partnership with the Taiwanese company Hon Hai Precision Industry Co., Ltd. – one of the worldwide leaders in electronics contract manufacturing- is without any doubt one of the keys that explain the company’s extraordinary turnover (which almost dobles every 2 years). Apple, the success story of a multinational company’s growth that seems limitless.

Foxconn Technology Group, a multinational electronics manufacturing company holding by Taiwanese, is the largest Apple offshoring manufacturing factory in China. The employees in Foxconn in China are about 230,000 last year, apparently it’s because the cheap labor force and other costs like logistics and raw materials. As it is explained in this video, offshoring is only used for low value added tasks.

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This business partnership is certainly the reason of Apple success. Otherwise we can notice a link between the net profit and the first years of partnership.

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But even if some scandals (working conditions, suicides…) casted a shadow over this American Chinese success story, Apple doesn’t only lie in their products but also in their branding. Apple doesn’t really sell a product but the brand. Indeed, people’s connection with the brand transcended commerce especially thanks to innovation, design and corporate ethics, which make them emotionally involved. Emotional fulfillment is often reflected in ads (see Iphone 4 commercial: https://www.youtube.com/watch?v=GniV1qdFYWg) through egocentric needs and happy feelings. This association drives a positive brand image despite some horror stories coming out of factories that could stain it.

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However under pressure (especially US government) and also attracted by a certain “made in USA” trend, Apple announced last year that it will open new manufacturing factories in US, due to the constantly increasing of the salary, which mostly result from the inflation rate. In this case, offshoring is gradually slowing down in China, also to avoid a possible (and dangerous) too much dependency vis-à-vis Foxconn

As an addition to the growth of labor costs in China, the cost for product freight is also increasing and has grown almost 4 times during last 5 years.
However, considering transportation costs it’s important to look at the key markets for Apple. Actually, now it’s not only the US, but also China which share in total Apple sales continuously grow and almost reached the same level as US sales. Moreover, the popularity of Apple products is improving fast in other Asian markets as Vietnam and also Eastern Europe. That means, that losing in freight costs to the US, Apple benefits a lot from transportation spending for other fast growing marketers.
Another important benefit that Apple’s offshoing to China provides to the company is the high flexibility of production in China plants and strong production ecosystem. Thus, production of the majority of Apple products’ components is located very close to each other. All that means high company’s agility and responsiveness of supply and meeting consumers’ needs.

Being in China is also a benefit due to its population. In fact China has a lot of possible workers (engineers as workmen) and it took 15 days to hire 9000 engineers there when it will take few months in USA.

Furthermore, a lot of minerals used in Apple’s screen are coming from China. Then, it is a time saving and time is money.

Overall, it can be concluded that Apple’s offshoring to China is an example how company can benefit from offshoring despite challenges that can always have place. From our point of view, Apple should continue to stick to its offshoring strategy to China but continuously track its production costs especially in terms of labor spending in order to catch possible opportunities that can occur especially in terms of manufacturing growth in other Asian countries; Indeed, fomer “low cost” countries are becoming more and more expensive as their economy grow. Some economists even highlight the “backshoring” theory, aluding to the offshore production risks, production etics and production costs on long scale.

 

 

Sources:

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=2&hp&

http://www.forbes.com/sites/stevedenning/2012/12/07/why-apple-and-ge-are-bringing-manufacturing-back/

http://www.economist.com/news/special-report/21569575-companies-need-think-more-carefully-about-how-they-offshore-and-outsource-herd-instinct

http://www.atlantico.fr/decryptage/iphone-ipad-production-usines-etats-unis-delocalisations-chine-obama-272650.html

http://venturebeat.com/2013/10/28/apples-170-billion-2013-amazing-and-amazingly-forgettable/

http://www.apple.com/…/22Apple-Reports-Third-Quarter

Group #58 @ Sophia Campus – Max Havelaar : trust label or marketing utopia ?

Max Havelaar : trust label or marketing utopia ?

Introduction
I. Max Havelaar : the major actor of fair trade
II. A win win deal : from producers to customers
III. A double sided reality
Conclusion

 

Group#58

Matte Emilien
Mazzucco Thibaud
Mercier Adrien
Morieux Doriane
Neyrand Louis
Phan Christina