CANARIA, JERALDINE A.

BSA- 20191151969
BBC1200_CASE #1: HOW THE i-PHONE IS MADE: APPLE’S GLOBAL PRODUCTION SYSTEM BSMA 1D

HOW THE iPHONE IS MADE: APPLE’S GLOBAL PRODUCTION SYSTEM

1. What are the benefits to Apple of outsourcing the assembly of the iPhone to foreign countries,
particularly in China? What are the potential cost and risks to Apple?

Apple can outsource the assembly of iPhones to foreign countries for cost savings, expertise and
infrastructure, scale, and a favorable regulatory environment. China has a well-established
infrastructure for manufacturing and assembling electronics, such as skilled workers, specialized
factories, and established supply chains. It also has a large population and a large labor force,
making it easier for Apple to scale up production quickly to meet demand. Additionally, China
has a more lenient regulatory environment than many other countries, which can help to reduce
costs and increase profits for Apple. Overall, outsourcing the assembly of iPhones to China and
other foreign countries provides significant benefits for Apple, such as cost savings, access to
expertise, scalability, and regulatory environment.

Outsourcing the assembly of iPhones to foreign countries, particularly China, can bring several
benefits to Apple, such as cost savings, access to expertise and infrastructure, scalability, and a
favorable regulatory environment. However, there are also potential risks associated with
outsourcing, such as supply chain disruptions, quality control issues, intellectual property risks,
ethical concerns, and customer loyalty issues. Outsourcing production to countries with lower
labor standards or human rights violations can raise ethical concerns and lead to negative
publicity for Apple. Additionally, reports of worker mistreatment, low wages, or unsafe working
conditions can damage Apple's reputation and affect customer loyalty. To avoid damaging
Apple's reputation, it is important to carefully manage the risks.

2. In addition to Apple, who else benefits from Apple’s decision to outsource assembly in China?
Who are the potential losers here?

Apple's decision to outsource assembly to China can benefit several parties, such as Chinese
workers, Chinese suppliers and contractors, and the Chinese government. However, there are
also potential losers from Apple's decision, such as U.S. workers, suppliers, and competitors.
Outsourcing production to China can lead to job losses in the U.S., as companies shift production
overseas to take advantage of lower labor costs. It can also harm U.S.-based suppliers and
contractors who provide materials, parts, and services for the manufacturing process, leading to
reduced revenue and profitability. Finally, it can give Apple a competitive advantage over its
rivals by reducing costs and improving efficiency.
3. What are the potential ethical problems associated with outsourcing assembly jobs to Foxconn in
China? How might apple deal with these?

Apple has been criticized for its labor conditions at Foxconn, including long hours, low wages,
and unsafe working conditions. This has raised concerns about the ethical treatment of workers
and whether Apple is doing enough to protect their rights. Additionally, Foxconn's manufacturing
processes can have significant environmental impacts, such as pollution, waste, and energy
consumption. To address these ethical concerns, Apple could take several measures, such as
improving labor conditions, promoting sustainability, and protecting intellectual property. These
measures would demonstrate Apple's commitment to ethical business practices and protect its
reputation among customers, investors, and other stakeholders.

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

The question of whether outsourcing undertaken by Apple is a good or bad thing for the
American economy is a complex and controversial one. Arguments for outsourcing include cost
savings, innovation and growth, globalization benefits, and job losses. Arguments against
outsourcing include job losses, trade imbalances, and national security risks. The net effect of
outsourcing on the American economy depends on various factors, such as the industry, the
location, the supply chain, and the policy environment.

5. How can a company like Apple with a global supply chain, hedge against the risk of significant
supply chain disruption due to the emergence of a new virus such as the SARS virus that
appeared in 2023 and the COVID-19 virus that appeared in 2020?

Apple and other companies can take several measures to hedge against the risk of significant
supply chain disruption due to a new virus such as SARS or COVID-19. These include
diversification, inventory management, risk assessment and planning, communication and
collaboration, technology and automation, and data analytics, artificial intelligence, and robotics.
These strategies can help Apple to better prepare for and mitigate the risks of supply chain
disruptions due to the emergence of new viruses or other unforeseen events, and build a more
resilient and sustainable supply chain that can adapt to future challenges and opportunities.