North South University

INB 372 – International Business

Section- 5

Case Studies
On

Assigned To:
MAHTAB MUNTAZERI [MBT]
Department of Marketing & INB
 Assigned By:

Name ID

Tawhidul Islam Pranto 1530466630

MD. Mehedi Hasan 1812595030
Sihab Sarar Hasan 2031449630
Efty Md Ishtiak Ahmed 2031209630
Mahadi Rahman Arian 2031325630
Q.1. What are the benefits to Apple of outsourcing the assembly of the
iPhone to foreign countries, and particularly China? What are the
potential costs and risks to Apple?

Answer: Apple gains from exporting iPhone manufacture to foreign

nations by lowering costs since Chinese labor is less expensive than
American workforce because China has the world's biggest
population. This aids in the lowering of the average total cost and, as
a result, the realization of manufacturing efficiencies. This also allows
Apple to focus on the firm's fundamental challenges, such as research
& innovation, market reputation, and systems engineering, which
causes the business retain its market dominance. This improves the
overall performance of the company and aids in obtaining efficiencies.
In addition, the executives said that suppliers in China are ready to
react to Apple's demands to increasingly become an important up or
down, which is not the case in the United States. However, several of
the subcontractors have expressed dissatisfaction with the
employment conditions. Apple is still at danger in terms of patent
claims, although this can be mitigated by today's tight patent
regulations.
Q.2. In addition to Apple, who else benefits from Apple’s decision to
outsource assembly to China? Who are the potential losers here?

Answer: China benefits the most because they grasp each aspect
about how all the product is manufactured, they now have thousands
of additional employment available, and their economy is growing.
Apple's strategy to outsource benefits the employers and employees
of the hired factories in China because of this more jobs are now
accessible. Chinese people are becoming more skilled. As a result,
people have a better standard of life, which also stimulates the overall
economy. Apple has over 380 Chinese suppliers who handle
practically every aspect of the smartphone production process, from
expensive components like display panels and chip packing services to
less expensive aspects like acoustic components and printed circuit
boards. Therefore, Chinese market is gaining access to more
innovative technologies. A new stage in the production of the current
iPhone models might assist all of Apple's suppliers, particularly those
in China, reduce carbon emissions and increase efficiency. As a result
of Apple's investment, other businesses and people appear to be more
willing to invest in the Chinese market.

For a variety of reasons, the United States would have to be the losers
in this instance. Apple charges a lot of money to own an iPhone in the
United States, yet it doesn't give much back to the people. As Apple
outsources from China, American workers are losing their
employment to Chinese workers. Despite the fact that Apple claims to
support roughly 250,000 employments in the United States, it also
supports an additional 700,000 employments outside of the US, many
of which might have been filled by American workers. Apple isn't
contributing much to the economy in the sense that they could have
outsourced and created jobs for a large number of Americans, but
they didn't. In the end, none of these policies benefit the American
economy as much as they benefit the Chinese economy.

Q.3. What are the potential ethical problems associated with

outsourcing assembly jobs to Foxconn in China? How might Apple deal
with these?

Answer: International outsourcing has several advantages for

businesses, despite the fact that it has been criticized in various ways.
Outsourcing operations cause a slew of cultural and ethical issues.
Outsourcing's key concerns are ethical issues in terms of competition
and worker abuse. Outsourcing's ethical issues:
Workplace environment: Internal and external work policies
frequently marginalize essential rights and freedoms, disrupting
workplace peace.

Cultural differences: The cultural features of western and Asian

countries are vastly different. This is not a good indicator for a
successful outsourcing partnership.

Quality of surveys: Outsourcing frequently encounters opposition and

accusations about quality degradation. Finding the correct partner for
outsourcing needs is difficult. Mismanagement of resources might
pose a serious risk.
Security concern: Contractors frequently abuse and mismanage data
linked to security and privacy by duplicating or exposing crucial
information of firm A. If the vendor firm obtains the technological
know-how, they may become a formidable rival.

Worker’s exploitation: Workers are given very low salaries and are
forced to work long hours without receiving any additional
compensation due to the demands of the job. They do not have a
pleasant working atmosphere. There are a variety of activities and
procedures that a firm may take to address ethical issues.

Apple might take the following measures and processes to address

these ethical issues:

1. Ensure that the IT attrition rate is not harmed by using a world-class

work environment and comprehensive HR practices.

2. Workplace cultural balance must be maintained and protected.

3. Ensure that vendor firms provide the highest quality while being
efficient. Ability of the employee Rather than confirming to specific
possibilities, the focus should be on achieving aims.

4. Before entering into any arrangement, confidentiality and strong

infrastructure are given top attention. a method of outsourcing.

5. The seller party's background and history must be thoroughly

investigated.
Q.4. On balance, do you think that the kind of outsourcing
undertaken by Apple is a good thing or a bad thing for the American
economy> Explain your reasoning?

Answer: In certain ways, outsourcing to China likely lowers company

and consumer prices, which aids the company's growth significantly.
As costs fall, prices fall, and demand rises, which is unsurprising. As a
result, the corporation is profitable, allowing Apple to invest more in
research and development in order to produce more products in the
United States. Everyone would undoubtedly agree that Apple needs
to keep an eye on the working conditions at its Chinese assembly
plants to ensure that employees are treated fairly and are not
subjected to bad living and working conditions, as well as working long
hours without pay. However, if Apple continues to do so, the American
economy will be in dire straits.