Case study: Apple iPhones – Not “Made in America”
What is meant by the globalization of human capital? Is this inevitable as firms increase their global operations? The globalization of human capital refers to the fact that employees are now spread out across the world by their employers. This including, the companies, employed, unemployed, stockholders, consumers, contractors, supply chain, firms and economies. Companies branch out because labor costs are cheaper and productivity is faster.
It is inevitable if firms increase their global operations because every country has something different to offer, something new, and without the current innovation being promoted to the market, the company will start to lose its edge on competition. 2. How does this case illustrate the threats and opportunities facing global companies in developing their strategies? Cost and Human Capital is the most important consideration for Global Companies. When President Obama’s inquired about Apple brining the job back to US, it was practically not possible for Apple.
The break down in the case study was that it cost a total of $179 to produce an IPhone and it retailed at $500 leaving a profit of $321. This would mean more profit for the global company. For Global company price and profit is the most important consideration to stay competitive. They can use the cheap labor in other countries to be price competitive This gave the perception that Apple did not care about its country. It also gives the perception of greed which a global company can face. 3. Comment on the Apple executive’s assertion that the company’s only obligation is making the best product possible.
“We don’t have an obligation to solve America’s problems. ” All though it is a harsh comment but I think it makes sense. Apple is a Global company with its offices around the world. It is in business to make money. It is not possible for Apple to solve America’s problem. Apple is just trying to be the best company out there in order to be on top with innovation and success. It is not Apple’s responsibility to solve America’s problems with employment; their responsibility is to form the best product. 4. Who are the stakeholders in this situation and what, if any, obligations do they have?
There are two stakeholders in this situation and they are: the companies Apple and Foxconn as well as the Chinese government. Apple has obligations to their employees both domestic and global. They need to be mindful that a corporation is only as good as its products as well as, its image. They need to be mindful that since its headquarters are in the United States, it should do all that it can to maintain a positive image. It is also important to make sure that the products they sell are quality products while keeping the price as low as possible. Foxconn has a stake in its people and the products they export.
The unfair and inhumane working conditions forced the government to step in. Foxconn also needs to be mindful of the issues presented previously for Apple (the difference they are headquartered in China). The fact that labor violations were taking place, China’s government had an obligations to its people. They need to protect their citizens from hazardous work conditions and hold Foxconn accountable for their actions. 5. How much extra are you prepared to pay for an IPhone if assembled in the United States? Personally I feel that the IPhone is already over price as is. The fact that they make $321 of profit off each phone is ridiculous.
If the phone is fully assembled in the United State I do not feel the price of the phone should increase at all. There are many products that are specifically made in America that cost the same amount as their global counterparts. Clothes are an example, all things being equal, a t-shirt made overseas cost relatively the same as a t-shirt made in the US. Why should an IPhone be any different? I feel that although the profit from each phone would be decreased, they would sell the same amount of phones if not more. 6. How much extra are you prepared to pay for an IPhone assembled in China but under better labor conditions or pay?
What kind of trade-off would you make? This also deals with the question previously asked. I have not changed my stance on IPhone; however, if they were to charge more to have it assembled in China, why couldn’t or wouldn’t they just produce it in America. It would not make sense if they had to increase cost to better working conditions in another country. I believe it would be cheaper to bring some of the laborers here to the US and open a plant here. 7. To what extent do you think the negative media coverage has affected Apple’s recent decision to ask the FLA to do an assessment and the subsequent decision by Foxconn to raise some salaries?
What do you think will happen now? I believe that the negative media coverage has inspired Apple to be more cautious about their corporate image. Subsequently, it affected their way of thinking so that they had to ask for an FLA assessment. They could ill-afford to continue to be seen in a negative light and heartless. They already stated that “They don’t have an obligation to solve America’s problems, only to make the best product possible”, after the unfair working conditions and labor violations were discovered it only added to the idea that the company was greedy and didn’t care about their employees.
Foxconn took pride in being one of the country’s most effective and efficient manufacturers. It could not allow the perception that they were running a “sweat shop” in which their employees were working 60 hours a week for little pay. The employee suicides did not help company’s image. They had to raise some salaries in order to save face in the public eye. Also, both companies had to show that although mistakes happened, once they were discovered they were fixed quickly. I believe now that the story is out they will have many follow up inspections to insure that both companies never come under scrutiny again.