For this assignment, please complete the Case Discussion Questions in the Closing Case: Who Makes the Apple iPhone? in the textbook. The expected content of your responses to these questions should include your analysis of the issues and concerns as described in the research material, based on the elements, trends, and themes highlighted in the chapter learning objectives in the textbook. In addition, your responses should be 2 pages in length and follow the case discussion format provided in the textbook.
The research material for this discussion includes the following two (2) articles:
• Refer to the Closing Case titled, “Who Makes the Apple iPhone?” in the textbook.
• Refer to our NAU Online Library; after opening the Online Library, select the down-arrow option within the Subject Guides Icon; then select the General Studies Option. Search for the following article: How U.S. Lost Out On iPhone Work:, CHARLES DUHIGG and KEITH BRADSHER. New York Times, 22 Jan 2012: A.1.
1. Responses to all of the Case Discussion Questions were provided.
2. Responses included the issues and concerns described in the research material.
3. Responses included analysis of the research material regarding the elements, trends, and themes highlighted in the chapter learning objectives in the textbook.
4. Responses exhibit the student’s understanding of the material, and capability to apply the textbook concepts to their 2-page document.
5. Responses are written at the collegiate level and are free from grammatical, spelling, punctuation, and other writing errors.
Business Review Lab (Custom) 2nd Ed. NAU Custom 2015 McGraw-Hill 9781307105049
By Apple choosing to outsource most of the manufacturing parts in China, it benefits from a number of factors while at the same time face some risks. The main advantage of Apple outsourcing is that in China, the cost of production is much lower than in the US. Take an example where Apple considered the risk of a new launch to be delayed for over nine months due to the change in design. By delaying, it means that Apple would have to bear with increased costs since there are costs to be met such as operational costs. The costs are reduced by the fact that in China, the labor supply is cheap. A good example is the availability of engineers in China compared to the US. In China, it took Apple 15 days to find over 8,000 engineers while in the US, it would take over 9 months. Further, by outsourcing in China, the overall production is fast compared to the US. This is because the outsourced manufacturers in China work for three shifts in a day and for seven days a week while in the US this is not possible. This means that Apple can speed up production depending on the demand and scale down the production too. Finally, the most critical production components are left to the parent company in the US. This means that workers in the US can focus more on product design, launch, and marketing. The main disadvantage which Apple might suffer is the effects of inflated costs. The outsourced firms in China might inflate the production costs since the main executives of Apple are located in the US; thus, have no direct supervision of the production process (Duhigg & Bradsher, 2012).
By Apple outsourcing from China, the main beneficiary is the Chinese economy. For instance, over 90% of the assembling and manufacturing process takes place in China. Further, the bulk of the components come from China. This means most of the production revenues are retained in China. In addition, the bulk of the employees are from China; hence, Apple will create employment opportunities for the Chinese population. At the same time, Chinese companies such as Foxconn also outsource in China; thus, the Chinese companies benefit a lot too. The main losers are the US population and manufacturers. This is because they have the ability to perform same process in the China market. This translates to the US economy losing the most.
The main problem associated with outsourcing at Foxconn is that the company does not uphold the rights of workers at all times. Employees blame the firm for long working hours, poor wages, and poor working conditions and torture. Past reports indicate workers who have committed suicide at Foxconn residential facilities. To solve this, the parent company in the US should have increased oversight of the outsourced firm compared to the current oversight levels (National American University, 2015).
The outsourcing taken by Apple is definitely a good thing for the American economy. On its own, the American economy could not meet the demand for iPhones. Hence, China helped it meet the demands while the economy of the US is still gaining at the same time. Finally, with increased production and sale, the higher the revenues and tax obligations to improve on the country’s welfare.
Duhigg, C., & Bradsher, K. (2012). How the US lost out on iPhone work. The New York Times, 21.
National American University (2015). Business Review Lab (2nd Ed.). New York: McGraw-Hill Education