Question

It wasn’t long ago that products from Apple, perhaps the most recognizable name in electronics manufacturing around the world, were made entirely in America. This is not so anymore. Now, almost all of the approximately 70 million iPhones, 30 million iPads, and 59 million other Apple products sold yearly are manufactured overseas. This change represents more than 20,000 jobs directly lost by U.S. workers, not to mention more than 700,000 other jobs and business given to foreign companies in Asia, Europe, and elsewhere. The loss is not temporary. As the late Steven P. Jobs, Apple’s iconic co-founder, told President Obama, “Those jobs aren’t coming back.”

At first glance, the transfer of jobs from one workforce to another would seem to hinge on a difference in wages, but Apple shows this is an oversimplification. In fact, paying U.S. wages would add only $65 to each iPhone’s expense, while Apple’s profits average hundreds of dollars per phone. Rather, and of more concern, Apple’s leaders believe the intrinsic characteristics of the labor force available to them in China which they identify as flexibility, diligence, and industrial skills are superior to those of the U.S. labor force. Apple executives tell stories of shorter lead times and faster manufacturing processes in China that are becoming the stuff of company legend. “The speed and flexibility is breathtaking,” one executive said. “There’s no American plant that can match that.” Another said, “We shouldn’t be criticized for using Chinese workers. The U.S. has stopped producing people with the skills we need.”

Because Apple is one of the most imitated companies in the world, this perception of an overseas advantage might suggest that the U.S. workforce needs to be better led, better trained, more effectively managed, and more motivated to be proactive and flexible. If U.S. (and Western European) workers are less motivated and less adaptable, it’s hard to imagine that does not spell trouble for the future of the American workforce. Perhaps, though, Apple’s switch from “100% Made in the U.S.A.” to “10% Made in the U.S.A.” represents the natural growth pattern of a company going global. At this point, the iPhone is largely designed in the United States (where Apple has 43,000 employees), parts are made in South Korea, Taiwan, Singapore, Malaysia, Japan, Europe and elsewhere, and products are assembled in China. The future of at least 247 suppliers worldwide depends on Apple’s approximately $30.1 billion in orders per quarter. And we can’t forget that Apple posted $16.1 billion in revenue from the first quarter of 2014, perhaps in part because its manufacturing in China builds support for the brand there.

As makers of some of the most cutting-edge, revered products in the electronics marketplace, perhaps Apple serves not as a failure of one country to hold onto a company completely, but as one of the best examples of global ingenuity.

Questions:

What are the pros and cons for local and overseas labor forces of Apple’s going global? What are the potential political implications for country relationships?

Do you think Apple is justified in drawing the observations and conclusions expressed in the case? Why or why not? Do you think it is good or harmful to the company that its executives have voiced these opinions?

How could managers use increased worker flexibility and diligence to increase the competitiveness of their manufacturing sites? What would you recommend?

Answer 1

Answer 1:

Pros:

1. When companies transfer its businesses in other parts of the world, labour of the foreign country gets the opportunity of the jobs.

2. Standard of living of the labours of the foreign country get better as the multinational organisation set up its facility in the foreign country.

3. The economy of the foreign country boost up and the spending power of the citizen increase in the foreign countries where the multinationals crop up.

Cons

1. When companies transfer its businesses in other parts of the world, employees of the domestic country loses the opportunity of getting the job into that company.

2. The economy of the domestic country shows a downward trend as the increasing number of companies move global and the spending capacity of the citizens of the domestic country decreases.

As Apple has moved the jobs into the other foreign countries, the political situations and relations between the countries may come under tension and the countries may restrict trade policies seeking the rivalry against the foreign countries.

Answer 2:

Apple is justified for drawing the observations and conclusion in the case as the company has been set up in order to generate revenues and since the workforce of US was getting less productive, hence, there was no choice left with the company but to move into the global market where it could find the highly productive employees that could be more productive and would generate higher revenues. Thus, seeking this drawback of US employees, Apple has opted to move its 90 percent of jobs to Chinese and other Asian and European markets and by implementing this strategy, it was successful in generating huge amount of profits. However, it is harmful for the company that its executives have voiced against the strategy of Apple as it may create a conflict among the employees who are in favour of the strategy of Apple and who are against the strategy of Apple and this tension may lead to less productivity which could bring down the revenues of the company.

Answer 3:

Worker flexibility can be used to increase the competitiveness of the manager’s manufacturing sites by allowing the workers to work according to their comfort ability. While implementing this strategy, manager need to take care that the worker focuses on task completion and that he is paid for maintaining the due dates and the schedule. Rather than asking workers to stick to the fixed and rigid working hours, managers should ask them to accomplish their task within the specified schedule. This will satisfy worker as he will be able to spend his time for his personal activities while maintaining the tasks of the company. This will also reduce the experience of fatigue of the employees and they would be more productive.