Closing Case 1 – Apple I Phone
University of Mary
May 8, 2015
1. What are the benefits to Apple of outsourcing the assembly of the iPhone to foreign companies, in particular China? What are the potential costs and risks to Apple?
Outsourcing the assembly of iPhones in foreign countries has the potential to expose Apple to fraudulent copies, cost saving assembly mistakes, and government agencies that wish to increase profits by tax increases and manufacturing tariffs. Benefits can be seen as an increase in profitability by taking advantage of low wage costs of assembly line workers and engineers. Many companies have utilized outsourcing particularly China. This has led to an entire supply chain being located closely to the assembly plant. This decreases costs for Apple in shipping required to produce the product.
2. In addition to Apple, who else benefits from Apples decision to outsource assembly to China? Who are the potential losers here?
Some beneficiaries would include the Chinese people themselves. Apple has created jobs for low wage earners that may otherwise not have jobs. These same workers, however, bear the potential to be the biggest losers as well. They often suffer at the hands of executives cost cutting measures that include low wages, poor working conditions, long hours and no overtime pay. Other losers in this scenario are American workers that have lost their jobs to overseas competition.
3. What are the potential ethical problems associated with outsourcing assembly jobs to Foxconn in China? How might Apple deal with these?
Some of the largest ethical problems for Apple outsourcing to Foxconn are the reported poor working conditions for subcontractors. Apple executives know of the problem and but has yet to come to a determination as to how to handle the issue. In my view, they need to have a serious conversation with top…