Impact of Globalization Who made my iPod? 1: Open the Powerpoint document labelled GCSE Toolkit going global.ppt2 2: Use an internet search engine to find the definitions of the following terms: a) b) c) d) Primary Production Secondary Production Tertiary Production Quaternary Production 3: Indicate with a tick which sector of industry each business is in Business Primary Insurance Forestry Coal-mining Computer assembly Travel agency Brewery Car showroom Consultancy Research and Development Secondary Tertiary Quaternary 1 4: Global supply chain of the iPod1 Tasks 1: In 2007, an Apple iPod sold for US$299. Determine the the level of profit (price minus costs) that Apple Inc make if they face the following cost base. Costs a) Portal Player licenses the processor core design for their microchip from ARM, a UK-based company. ARM charge approximately US$1 per chip. b) Over 400 low cost components (such as capacitors and resistors) are needed to make an iPod. The combined value of these components is US$21.28. c) Ten high-value components, with a combined value of US$23.12, are needed to make one iPod. d) The iPod is assembled in China by the Taiwanese company Inventex. Insertion, testing and assembly is worth US$3.70 per iPod. e) The most expensive component in an iPod is the 30GB hard drive. This is made by the Japanese company Toshiba in either China or the Philippines. It is worth US$73.39. f) iPods are sold in shops around the world; many in the USA and UK. The distributor receives US$30 of the value of each iPod for transporting them. g) The microchip that controls video playback is another expensive component. This is made by the US company Broadcom in Taiwan or Singapore. It is worth US$8.36. h) The second most expensive component in an iPod is the display. This is made by Toshiba Matsushita in Japan and is worth US$20.39. i) Another expensive microchip manages the iPod’s functions. This is made by the US company Portal Player in the USA or Taiwan. It is worth US$4.94. j) iPods are sold in many different shops – in the US you can even buy iPods in Walmart. The retailer receives US$45 for every iPod it sells Activity adapted from Linden, Kraemer and Dedrick (2007) ‘Who captures value in a global innovation system? The case of Apple’s iPod’, University of California.) 1 2 Fill in the table below with the relevant information Cost of Production Production Sector Cost in US$ Total 3 2: (a) What is the level of profit as a % of revenue? Formula: Profit/Price x 100 (b) What is the level of profit as a % of costs? Formula: Profit/Costs x 100 3: The following companies are some of Apple Inc’s partners in the production of the iPod. a) Silicon, a raw material, is essential for the production of microchips. The Norwegian company Elkem is a major producer of silicon. b) The raw material aluminium forms a major part of an iPod’s hard drive. The Canadian company Rio Tinto-Alcan is the largest producer of aluminium in the world. Their biggest smelter is in Tomago, Australia. c) Old iPods can be recycled. In the US Apple Inc has a recycling partnership with Cupertino, in California. Visit these companies’ websites and find what their mission statement is. Import this into the table Organization Mission Statement Elkem (https://www.elkem.com/) Rio Tinto Alcan (http://www.riotinto.com/aboutus/aboutrio-tinto-5004.aspx) (a) In your opinion, which of the two mission statements is more socially responsible? Explain. (b) Following this, determine if each firm has a Corporate Social Responsibility policy that is linked to sustainability. Summarize, in your own words, what, if any, this sustainability policy entails. (c) Investigate Apple Inc’s links with the city of Cupertino in California. Write a paragraph, in your own words, how the relationship between the two entities has been mutually beneficial (benefits both parties) 4 4: Global division of labour: a way of organising work, especially making things, so that it is done as a set of separate processes by different (groups of) people a) Does your iPod case study suggest that there is a global division of labour? If so, why? b) How does this compare to the way products were made 50 years ago? 5: Worldmapper a) Go to the website Worldmapper – www.worldmapper.org b) Select the category ‘manufacturers’. This will result in a list including ‘Manufacturers Maps’. c) Select a map you wish to view; this could be for example, ‘Car exports’. d) Copy the relevant map into your word document. Answer the following questions in relation to your chosen map. 1. How can the global division of labour be described? 2. Do you think that these patterns will stay the same, or will they change in the future? 3. What impact do you think that the global recession (economic crisis/downturn in the global economy) has had on these trading patterns? 4. Do you think that having a global division of labour is a good or a bad thing? Why? 5