QUESTION 1: How has globalization created opportunities for companies like Apple to optimize their supply chains?
Answer:
Since much of Apple's manufacturing is done abroad and obtained from all over the world, globalization has allowed them to improve their supply chains by creating opportunities. Globalization has given Apple access to the highest quality items as well as any and all materials they desire, allowing them to create distinctive and profitable products. Apple is able to take advantage of differences in cost and quality of factor of production due to globalization, and by diversifying their suppliers, they will have a larger pool of suppliers to choose from around the world rather than relying on a small number of suppliers who are only available to them. As a result, the risk is lowered:
• This provides
Apple more bargaining power than relying on a single supplier because Apple is
more likely to have control over the price of their supply, allowing them to
secure the best deal at the end of the deal. In fact, because of the
differences in the speciality of different countries, Apple is able to obtain
high-quality and low-cost raw materials and electrical components for its products from a variety of countries.
• Apple is also
able to source material and electronic components from various locations and
take advantage of location advantages around the world as a result of globalization,
which will reduce logistical challenges such as delivery of material and
electronic components close to their manufacturing plant, lowering delivery
costs. The location of component factories and suppliers near the Foxconn
production factory in China may be seen. This is true in both directions, as
Apple's goods can be transported anywhere in the world at a low cost and in a
short amount of time, giving Apple a competitive advantage in the market.
QUESTION 2:
What factors make China such an attractive production location for Apple? How
does production in China help Apple compete?
Answer:
Given the
abundance of labor supply of various abilities and skill levels that are
available in China and are expanding over time, labor costs in China are substantially lower
for both low skilled and high skilled labor. Because labor costs and
availability are lower in China than in the United States, operation costs will
also be significantly lowered. In fact, training costs are lower since there is always a supply of laborers with diverse abilities available and
easily replaceable.
China is a
manufacturing hub with significant manufacturing capital, allowing them to
quickly scale up or down production in response to Apple's requests, as seen in the
case study. As a result, Apple can quickly adjust to changes in market
conditions such as demand and supply for its products, allowing for mass
production on demand. Upgrades or extra hardware systems that are not
accessible at the time of design can be simply put into the iPhone at any
suitable available stage of manufacturing, even on a larger scale, giving Apple
every opportunity to improve the quality of their products.
QUESTION 3:
Why has Apple faced criticism for its decision to produce its iPhone in China?
Is the criticism warranted? Explain.
Answer:
Apple has been
chastised for their decision to manufacture the iPhone in China because:
• Apple's
subcontractors have been singled out for their deplorable working conditions.
Low compensation for line employees, long hours, required overtime for little or no
additional pay, and poor safety records are among the criticisms. Furthermore,
President Trump has blasted Apple's outsourcing practices, claiming that the business
is guilty of sending American jobs offshore.
• Indeed, there
is justification for the critique. Despite the fact that Apple disagrees with
this judgment, the company has responded by boosting its investment in U.S.
facilities. For example, in 2018, the corporation declared that it would invest
$30 billion over five years to create 20,000 new Apple jobs in the United
States. However, the majority of these employees are projected to be in
software development and data center operations, rather than manufacturing and
assembly.
WHAT TO DO:
• INTRODUCTION
(Introduces the case, including the background and any previous studies of the
issue.)
Globalization and
technological advancements have benefited Apple immensely. For example, Apple
began as essentially an American company, but thanks to globalization, it has
grown into a multinational corporation. According to the annual report, the
Americas account for only around onethird of the company's sales, a figure that
includes Canada and all of Latin America in addition to the United States. As a
result, the corporation might be described as selling globally. Sales in
Asia-Pacific were particularly strong, and the corporation has a number of
flagship stores there. Advanced semiconductors are made in Germany and Taiwan,
memory is made in Korea and Japan, display panels and circuitry are made in
Korea and Taiwan, rare metals are made in Africa and Asia, and the iPhone's
gyroscope is made in Switzerland. Apple's main subcontractor, Foxconn, a
Taiwanese multinational corporation, assembles half of all iPhones sold
worldwide today, with China playing a significant role. Foxconn operates iPhone
production plants in a number of additional countries, including Brazil and
India. Pegatron, a Taiwanese business, also assembles iPhones for Apple in a
Chinese factory. Apple projected that around 8,700 industrial engineers were
needed to oversee and guide the 200,000 assembly-line employees engaged in
creating the initial iPhone since it was much easier to hire engineers there.
China controls the entire supply chain. Several Apple subcontractors have been
singled out for their substandard working conditions. Low compensation for line
employees, long hours, required overtime for little or no additional pay, and
poor safety records are among the criticisms. Former Apple executives said the
firm is riven with unsolved tensions.
• AIMS
(Describes the purpose of the study and the specific questions you are trying
to
answer.)
The study's aim
is to evaluate Apple's vision of providing the best user experience to its
consumers around the world through new hardware, software, and services. A
mission statement, on the other hand, focuses more on the company's goals and
how to achieve them. The long-term vision is about how that same company views
itself. To have a comprehensive grasp of how they think about the future, it is
vital for every business to understand how the mission and vision are
developed. One of the most essential aspects of Apple's operation, according to
the company, is the capacity of Chinese contractors to respond promptly to
requests to grow production.
• METHODS
(Explains how the study was carried out, e.g. what research methods did you use
to collect data: interviews, observations, questionnaires, etc.? What were the
circumstances of your data collection?)
Apple keeps its
market survey a closely guarded secret to keep competitors at far. If
competitors acquire access to the information, they may be able to exploit it
to detect market gaps and gain a competitive advantage over Apple. SWOT
analysis, user surveys, prototype testing, and anonymous data collection are
some of Apple's additional research methods, all of which are done internally.
Though Apple has its own research methodologies, they are not without
limitations. Because it is a well-known brand, conducting research on a global
basis, for example, can be tough. There's also the added pressure to satisfy
high expectations because of Apple's image as a new, innovative brand that
continually develops cutting-edge products and leads the industry. Apple's
enormous success can partly be due to customer loyalty to the brand. Apple has
succeeded to become one of the top firms in the technology market by developing
a strong relationship with its customers. Apple's limited market research and
massive cult following, combined with its overall great product design and
commitment to innovation, make it a virtually unstoppable force in the world of
technology.
• RESULTS
(Describes what you found through your investigations, e.g. the main themes
that came out in researches, interviews, responses to questionnaires,
significant observations.)
Apple is known
for having one of the world's best-managed supply chains. The tech behemoth can
demand high-quality products and impose stricter terms on its suppliers because
of its size and global reach. Apple spends a lot of time and money monitoring
its suppliers. Relationships that have helped the tech behemoth operate one of
the most efficient supply-chain management systems currently available. China
is an important global region for Apple in general. Due to the decrease in
worldwide communication costs, organizations have more options to develop their
enterprises. Up-todate data can be obtained, making it easy to keep track of
global market trends. The number of people who use the Internet is constantly
increasing. This aids in the creation of a global audience, and ads are no
longer bound by geographic region.
Foreign
enterprises, worldwide brands, strange products, and new values are all made
possible by globalization. Consumers are increasingly purchasing identical
things imported from other nations rather than purchasing local products.
Traditional norms, attitudes, and behaviours may become more homogeneous
through time in this way. National identity could be obliterated by 'global
culture. Every day, Chinese companies produce hundreds of thousands of iPhones.
Each one is a symbol of American consumerism, and each one is made up of
components from many countries. Its ideas are based on the inventiveness and
competitive spirit that have made and continue to make the country great, in
good times and bad.
• DISCUSSIONS
(Explains the significance of the study and what can be learnt from it. Note
that a case study is a study of a particular situation so you can't generalize
the results to all other situations. That means your discussion should focus on
what can be learnt about that particular situation and the individuals
involved.)
China was an
important aspect of the company's manufacturing, outsourcing, and general
prosperity, but it also had drawbacks and hazards. Poor working circumstances,
such as low pay, long workdays and hours, not properly compensating employees
for extra time worked (overtime), and lax safety standards, are all risks. The
advantages of outsourcing iPhone manufacture to foreign countries are
frequently associated with lower labour costs. As a result, labour expenses in
China are significantly lower than in the United States.
Apple claims that
it is not just because of labor costs, but also because of its Chinese
subcontractors' ability to respond rapidly to Apple's demands to scale
production up and down. Furthermore, it is considerably easier to immediately
hire engineers there. Engineers were required to supervise and guide
assembly-line employees involved in the manufacture of the iPhone; it took 15
days to find that many engineers, whereas in the United States, it would most
likely take nine months to find the same number of engineers. Despite China's
outsourcing prowess, Apple's subcontractors have been chastised for their poor
working conditions.
Apple's move to
outsource benefits the employers and employees of the hired factories in China,
as more jobs are now accessible. People in the United States are the potential
losers here, as they will lose jobs as a result of Apple's outsourcing to
China. In China, factories are located in close proximity to one another.
When the Foxconn
assembly plant requires supplies, workers simply need to walk next door. It
makes it simple for the manager to make manufacturing decisions. In addition,
Apple claims that its business supports another 250,000 jobs in engineering,
manufacturing, and transportation in the United States. The subcontractors are
one of the potential issues with outsourcing assembly jobs to Foxconn in China.
Low pay for line workers, long hours, and mandatory overtime are among the
criticisms. Apple should talk to its subcontractors about how to improve the
working conditions at their facilities. One of the most serious ethical issues
with outsourcing assembly to Foxconn is that employees have been singled out
because of their poor working conditions. This is, of course, an ethical issue,
because Apple is aware of the working circumstances but has done nothing to
address them. Apple may wish to speak with the company's executives in order to
improve employee working conditions. They could argue that if they do not
improve working conditions, they will have to manufacture iPhone components
elsewhere.
In some ways,
Apple's assumption of outsourcing is a good thing. For example, outsourcing in
China keeps labour costs low, allowing them to use the savings in improving
their products and doing research to invent and manufacture new items in the
United States. They must, however, continue to monitor labour conditions in its
Chinese assembly factories to avoid issues such as extended work hours,
mandatory overtime for little extra pay, and bad safety records.
•
RECOMMENDATION AND RESEARCHES (Provides proposals for future action to solve the
problem or improve the situation, e.g. by applying a particular kind of
treatment or intervention)
Other than cost,
I believe Apple's management team should make a greater effort to convey the
advantages of producing overseas. International possibilities for its
employees, speed to market for its customers to have the latest and greatest
technology, and supply chain efficiencies with subcomponent suppliers are just
a few of the advantages. Apple should also publicize the number of foreign
workers they have sponsored to work in the United States in order to contribute
to the country's diversity and talent pool. I also believe that Apple, along
with other manufacturing businesses such as Microsoft, Alphabet, and Amazon,
should band together to oppose the current President's aims of bringing all
manufacturing back to the US and "making America great again."
Bringing that
much manufacturing back to the US would be a significant change that would
require companies to invest a significant amount of money and resources in the
move, and the country might not be able to keep up with the high demand for
skills and labour required to manufacture all hardware products. Apple has a
need for suppliers, and suppliers have a need for Apple. It's a smooth
connection that's frequently mutually beneficial, yet it may be tense at times.
Apple and its overall market success have a significant impact on suppliers.
Market analysts frequently use financial reports from supplier companies to
forecast sales for Apple products, and investors frequently look to Apple's
underlying suppliers for insights into the company's performance as well as
more granular investment opportunities on their own.
Reference:
1. https://digital.hbs.edu/platform-rctom/submission/globalization-with-apple/
2. https://www.slideshare.net/mahiadel94/apple-inc-strategic-case-analysis
3. https://financesonline.com/hello-world-the-economics-of-iphone/
4. https://u.osu.edu/iphone/3-the-manufacture-of-the-iphone/
5. https://www.investopedia.com/articles/investing/090315/10-major-companies-tied-apple-supply-chain.asp
Step-by-step explanation
Globalization and
technological advancements have benefited Apple immensely. For example, Apple
began as essentially an American company, but thanks to globalization, it has
grown into a multinational corporation. According to the annual report, the
Americas account for only around one-third of the company's sales, a figure
that includes Canada and all of Latin America in addition to the United States.
As a result, the corporation might be described as selling globally. Sales in
Asia-Pacific were particularly strong, and the corporation has a number of
flagship stores there. Advanced semiconductors are made in Germany and Taiwan,
memory is made in Korea and Japan, display panels and circuitry are made in
Korea and Taiwan, rare metals are made in Africa and Asia, and the iPhone's
gyroscope is made in Switzerland. Apple's main subcontractor, Foxconn, a
Taiwanese multinational corporation, assembles half of all iPhones sold
worldwide today, with China playing a significant role. Foxconn operates iPhone
production plants in a number of additional countries, including Brazil and
India. Pegatron, a Taiwanese business, also assembles iPhones for Apple in a
Chinese factory. Apple projected that around 8,700 industrial engineers were
needed to oversee and guide the 200,000 assembly-line employees engaged in
creating the initial iPhone since it was much easier to hire engineers there.
China controls the entire supply chain. Several Apple subcontractors have been
singled out for their substandard working conditions. Low compensation for line
employees, long hours, required overtime for little or no additional pay, and
poor safety records are among the criticisms. Former Apple executives said the
firm is riven with unsolved tensions.
The study's aim
is to evaluate Apple's vision of providing the best user experience to its
consumers around the world through new hardware, software, and services. A
mission statement, on the other hand, focuses more on the company's goals and
how to achieve them. The long-term vision is about how that same company views
itself. To have a comprehensive grasp of how they think about the future, it is
vital for every business to understand how the mission and vision are
developed. One of the most essential aspects of Apple's operation, according to
the company, is the capacity of Chinese contractors to respond promptly to
requests to grow production.
Apple keeps its market survey a closely guarded secret to keep competitors at
far. If competitors acquire access to the information, they may be able to
exploit it to detect market gaps and gain a competitive advantage over Apple.
SWOT analysis, user surveys, prototype testing, and anonymous data collection
are some of Apple's additional research methods, all of which are done
internally. Though Apple has its own research methodologies, they are not
without limitations. Because it is a well-known brand, conducting research on a
global basis, for example, can be tough. There's also the added pressure to
satisfy high expectations because of Apple's image as a new, innovative brand
that continually develops cutting-edge products and leads the industry. Apple's
enormous success can partly be due to customer loyalty to the brand. Apple has
succeeded to become one of the top firms in the technology market by developing
a strong relationship with its customers. Apple's limited market research and
massive cult following, combined with its overall great product design and
commitment to innovation, make it a virtually unstoppable force in the world of
technology.
Apple is known
for having one of the world's best-managed supply chains. The tech behemoth can
demand high-quality products and impose stricter terms on its suppliers because
of its size and global reach. Apple spends a lot of time and money monitoring
its suppliers. Relationships that have helped the tech behemoth operate one of
the most efficient supply chain management systems currently available. China
is an important global region for Apple in general. Due to the decrease in
worldwide communication costs, organizations have more options to develop their
enterprises. Up-to-date data can be obtained, making it easy to keep track of
global market trends. The number of people who use the Internet is constantly
increasing. This aids in the creation of a global audience, and ads are no
longer bound by geographic region.
Foreign
enterprises, worldwide brands, strange products, and new values are all made
possible by globalization. Consumers are increasingly purchasing identical
things imported from other nations rather than purchasing local products.
Traditional norms, attitudes, and behaviours may become more homogeneous
through time in this way. National identity could be obliterated by 'global
culture. Every day, Chinese companies produce hundreds of thousands of iPhones.
Each one is a symbol of American consumerism, and each one is made up of components
from many countries. Its ideas are based on the inventiveness and competitive
spirit that have made and continue to make the country great, in good times and
bad.
China was an
important aspect of the company's manufacturing, outsourcing, and general prosperity,
but it also had drawbacks and hazards. Poor working circumstances, such as low
pay, long workdays and hours, not properly compensating employees for extra
time worked (overtime), and lax safety standards, are all risks. The advantages
of outsourcing iPhone manufacture to foreign countries are frequently
associated with lower labour costs. As a result, labour expenses in China are
significantly lower than in the United States.
Apple claims that
it is not just because of labor costs, but also because of its Chinese
subcontractors' ability to respond rapidly to Apple's demands to scale
production up and down. Furthermore, it is considerably easier to immediately
hire engineers there, Engineers were required to supervise and guide
assembly-line employees involved in the manufacture of the iPhone; it took 15
days to find that many engineers, whereas in the United States, it would most
likely take nine months to find the same number of engineers. Despite China's
outsourcing prowess, Apple's subcontractors have been chastised for their poor
working conditions.
Apple's move to
outsource benefits the employers and employees of the hired factories in China,
as more jobs are now accessible. People in the United States are the potential
losers here, as they will lose jobs as a result of Apple's outsourcing to
China. In China, factories are located in close proximity to one another. The
subcontractors are one of the potential issues with outsourcing assembly jobs
to Foxconn in China. Low pay for line workers, long hours, and mandatory
overtime are among the criticisms. Apple should talk to its subcontractors
about how to improve the working conditions at their facilities. One of the
most serious ethical issues with outsourcing assembly to Foxconn is that
employees have been singled out because of their poor working conditions. This
is, of course, an ethical issue, because Apple is aware of the working
circumstances but has done nothing to address them. Apple may wish to speak
with the company's executives in order to improve employee working conditions.
They could argue that if they do not improve working conditions, they will have
to manufacture iPhone components elsewhere. In some ways, Apple's assumption of
outsourcing is a good thing. For example, outsourcing in China keeps labour
costs low, allowing them to use the savings in improving their products and
doing research to invent and manufacture new items in the United States. They
must, however, continue to monitor labour conditions in its Chinese assembly
factories to avoid issues such as extended work hours, mandatory overtime for
little extra pay, and bad safety records.
Other than cost,
I believe Apple's management team should make a greater effort to convey the
advantages of producing overseas. International possibilities for its
employees, speed to market for its customers to have the latest and greatest
technology, and supply chain efficiencies with sub-component suppliers are just
a few of the advantages. Apple should also publicize the number of foreign workers
they have sponsored to work in the United States in order to contribute to the
country's diversity and talent pool. I also believe that Apple, along with
other manufacturing businesses such as Microsoft, Alphabet, and Amazon, should
band together to oppose the current President's aims of bringing all
manufacturing back to the US and "making America great again."
Bringing that much manufacturing back to the US would be a significant change
that would require companies to invest a significant amount of money and
resources in the move, and the country might not be able to keep up with the
high demand for skills and labour required to manufacture all hardware
products. Apple has a need for suppliers, and suppliers have a need for Apple.
It's a smooth connection that's frequently mutually beneficial, yet it may be
tense at times. Apple and its overall market success have a significant impact
on suppliers. Market analysts frequently use financial reports from supplier
companies to forecast sales for Apple products, and investors frequently look
to Apple's underlying suppliers for insights into the company’s performance as
well as more granular investment opportunities on their own.