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? There are many benefits for Apple in outsourcing their assembly line to China. Although Apple claims that the decision wasn’t about the cheap labor, it all comes down to the money. The decision was rooted in the fact that it would save Apple a lot of money. It is understandable that a company seeks to reduce their manufacturing costs, but Apple should admit that the move was about the money instead of pointing to other reasons. In the case, Apple claims that it was also about the convenience of the service that was available in China. They claimed that they could order a change in the manufacturing of the product and that China would be able to accommodate them almost immediately.
Another benefit that outsourcing provided Apple with is the engineers needed for the iPhone production. Apple had need an amount of engineers for the job, and it was quoted that it would take 15 days to find the engineers in China as opposed to 9 months in the US. Some costs and risks that Apple faces in the future could be that China will raise their prices but not higher than what is would costs Apple to return the assembly line to the US. China will charge a higher rate, but not enough to where Apple with find another country to outsource to. Another risk that Apple may face is that China will easily imitate their products, due to the simple facts that they are the ones putting everything together and they are the ones that know all the details about the iPhone. So Apple may face a strong competitor or imitators that may put their company at risk.
2. In addition to Apple, who else benefits from Apple’s decision to outsource assembly to China? Who are the potential losers here?
First off, the ones who benefit the most from Apple outsourcing to China, is China. They benefit the most because they know every detail about how the product is made, they now have hundreds of thousands more jobs available, and also because it is boosting their economy. China gains nearly the most from Apple deciding to outsource.
The losers in this case would definitely have to be the US for a number of reasons. Apple is charging the US citizens a lot of money to own an iPhone while at the same time not giving much back to the people. Apple isn’t giving much back in to the economy in the sense that they could have not outsourced and provided with many and many of Americans with job opportunities, but they didn’t. All of these decisions in the end do not benefit the American economy as much as the Chinese economy.
3. What are the potential ethical problems associated with outsourcing assembly jobs to Foxconn in China? How might Apple deal with these?
The most obvious ethical problem with outsourcing assembly jobs to Foxconn is that they dismissed the American people as though they are not worth offering the jobs to. There are many American citizens that simply do not agree with Apple’s decision to outsource their jobs to China, because it doesn’t benefit the American people but rather only Apple.
Additional ethical problems are the fact that Apple went to China for their cheap labor, and are continuing to operate their knowing that there are many employees in those factories that being mistreated. The Foxconn employees are being demanded to work overtime, they are not being paid properly and that they are simply misusing and taking advantage of the situation all for Apple’s benefit. This is a major ethical problem because of the fact that Apple is not actively trying to correct that situation.
4. On balancing, 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
As stated previously, outsourcing does not benefit the American people or economy. So Apple deciding to outsource their assembly line to China is a bad thing for the US. Apple deciding this simply benefits themselves more than anyone else. The next one that gets the most benefit from this outsourcing is Chinas economy. Apple is providing China with more job opportunities which benefit their economy. Apple is only selling their products to the American people; they are not giving back to them in any other way.
Courtney from Study Moose