Case 1 Who Makes The Apple Iphone
February 4, 2015
Who Makes the Apple iPhone
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.
Who Makes the Apple iPhone
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.