Week 1 Case Study Dodd Vernon
1. Read the case entitled “Who Makes the Apple iPhone?” on page 33.
2. Answer the following questions in three pages.
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?
Lower labor cost is one of the most basic reasons but as the case points out, that was only a small consideration.
Apples ability to scale production up/down very quickly and even with short based on demand and based on product cycles seems to be one of the greatest benefits. China has more capacity, flexibility and seems to be willing to take larger risk to win business. This is evident in the article with the plants willingness to begin scaling out for production to produce glass even before winning the bid. The plan chose to take a big risk to win the business and was successful in doing so.
Accessibility / availability of technical engineers that are critical to the development and production of the products is also a large benefit. As the article mentioned, it took days rather than months to find highly qualified engineers.
Another great benefit was the ability to have the entire supply chain all in one geographic area. This quickens the research and development as well as the production processes dramatically and streamlines the manufacturing process.
2. In addition to Apple, who else benefits from Apple’s decision to outsource assembly to China?
Foxconn company obviously benefits because they won the bid for the work that Apple needed completed and by successfully producing the goods, most likely ensured a continued partnership with Apple.
The China economy benefits as this work not only contributes to taxable trade but also provides income to workers who will spend within the local economy for various goods and services.
The workers in China obviously benefit because they have opportunity to work and provide for themselves and their family. Depending on
2. Answer the following questions in three pages.
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?
Lower labor cost is one of the most basic reasons but as the case points out, that was only a small consideration.
Apples ability to scale production up/down very quickly and even with short based on demand and based on product cycles seems to be one of the greatest benefits. China has more capacity, flexibility and seems to be willing to take larger risk to win business. This is evident in the article with the plants willingness to begin scaling out for production to produce glass even before winning the bid. The plan chose to take a big risk to win the business and was successful in doing so.
Accessibility / availability of technical engineers that are critical to the development and production of the products is also a large benefit. As the article mentioned, it took days rather than months to find highly qualified engineers.
Another great benefit was the ability to have the entire supply chain all in one geographic area. This quickens the research and development as well as the production processes dramatically and streamlines the manufacturing process.
2. In addition to Apple, who else benefits from Apple’s decision to outsource assembly to China?
Foxconn company obviously benefits because they won the bid for the work that Apple needed completed and by successfully producing the goods, most likely ensured a continued partnership with Apple.
The China economy benefits as this work not only contributes to taxable trade but also provides income to workers who will spend within the local economy for various goods and services.
The workers in China obviously benefit because they have opportunity to work and provide for themselves and their family. Depending on