Apple’s Iphones - Not “made in America”

Case Study 1 - Apple’s iPhones—Not “Made in America”

Abiola Akintola

Monroe College

MG615 Managing in the Global Environment

DR. D. Tennyson

Case Study 1 - Apple’s iPhones—Not “Made in America”

Globalization of human capital is a trend that not only affects the economy of all countries involved, it also affects the consumers, the firms and most especially the labor force. The labor force suffers the most due to firms looking to cut cost and maximize profit, thereby exploiting their employees.

Apple has been identified to be one of the major companies that promote the globalization of human capital by outsourcing the production of their Apple iPhones and other product lines. This, in turn, has negatively affected their public image, making them reevaluate and reassess some of their company’s actions.

Case Question 1.11

Globalization of human capital is when a company leaves its country of operation and origin to contract out jobs or some part of their production to another country. Globalization of human capital cannot be avoided because when a firm increases their global operation, they have more customers and demand and also more competition. To manage both factors they have to satisfy their customer needs while ensuring they cut down production cost and time while maximizing profit and maintaining their level of quality.

“America does not compare favorably with the industrial skills, hard work and flexibility that can be found in a company such as Foxconn” (Deresky, 2017 p.36)

 “Chinese workers being roused in the night to accommodate a redesigned iPhone screen and, within a few days, being able to produce 10,000 iPhones a day, a feat not possible in U.S factories” (Deresky, 2017 p.36)

Case Question 1.12

One of the threat identified in the case study was the negative publicity Apple suffered after a couple of workers committed suicide due to poor work conditions at one of their manufacturing site in Foxconn. Such publicity is not good for the company as it questions their ethics and value which could affect their public image and drive down sales.

Another threat would be competition, as this will motivate their need to source for lower production cost to drive down prices. “Firms from any country now compete with companies at home and abroad, and domestic competitors are competing on price by outsourcing or offshoring resources and services anywhere in the world” (Deresky, 2017 p.10)

The major opportunity is the maximization of profit while cutting down production cost. Deresky in her case study found that Time did a research on the cost of production of an Apple’s iPhone that retailed at $500, the overall production cost was valued at $179 and a profit of $321 was recorded.

The breakdown was, “$61 worth of components comes from Japan, with its high-end technology manufacturing, $30 of components from Germany, $23 worth of components from South Korea, $7 worth of labour from Chinese assembly lines, $48 from unspecified sources, and $11 from the United States” (Deresky, 2017 p.36). “For the first quarter of 2012, Apple made $13 billion in profit” (Deresky, 2017 p.36).

Case Question 1.13

The comment made by Apple executive goes to show that they are more focused on their product development without regards to the effect it necessarily has on America’s economy. Their main goal was to produce good quality product, and they cannot do that if they do not have the resources and manpower to execute the production, hence their need to outsource.

“The management of supply chains and rapid access to component parts and manufacturing supplies from various factories in close proximity” (Deresky, 2017 p.36).  In addition, “Apple maintains that the large number of engineers and other skilled workers who could be accessed on short notice in China simply are not readily available in the United States, nor are the factories with the scale, speed, and flexibility that such a high-tech company needs” (Deresky, 2017 p.36).

Case Question 1.14

The stakeholders are Apple, the contractors (Foxconn) and the consumers. Apple’s obligation is to produce the products to meet consumer demand while ensuring fair trading practices are met, while the contractor’s obligation is to ensure the products are developed to meet Apple’s stipulated quality standard, while maintaining low production cost and ensuring there is no violation of any labor practice and human rights. The consumers obligation is to buy the product to ensure Apple makes profit.