Case Study #2, Apple and Foxconn

Read the case study Will Foxconn Remain Apple’s Top Supplier of iGadgets? In Ch 07 (below) and answer each of the following four questions:

1.) What threats, opportunities, strengths, and weaknesses can you identify
at Foxconn? How has it responded strategically? (Answer in 3 paragraphs or
more)
2.) If Foxconn’s management hired you to offer advice on improving its
ethical decision-making and corporate social responsibility, what would you
suggest? Why?
3.) Why do you think Tim Cook, after years of using Foxconn for most of
Apple’s production needs, shifted some production to Pegatron? And what are
your theories about why both suppliers moved some production to two other
countries?
4.) If you were Apple, where else would you consider producing?

– The case study should include an introduction and conclusion.
– Each question needs to be answered in 2 or more well-developed paragraphs.
– Paragraphs at this level of study are 5+ well-developed sentences.
– Students must reference and apply chapter concepts from the assigned
textbook demonstrating they understand the chapter learning objectives and
how to apply these to real organizational situations IN EACH ANSWER.

Class textbook AND MANDATORY SOURCE is:
Bateman, T., & Konopaske, R. (2022). Management: Leading & Collaborating in
the Competitive World (15th ed.). McGraw-Hill Higher Education (US).
https://full-bookshelf.vitalsource.com/books/9781265385811

The emphasis of case studies is on the application of learned chapter
concepts to the company’s HR strategy.
APA: Please include in-text citations (with p. #) for all content and
external sources included.
Required: APA-level headers to separate each answer
STRONG emphasis is placed on the application between THEORY and PRACTICE.
Avoid quotes and interpret all content in your own words; follow with a
citation.

****BEGINNING OF CASE STUDY****

Will Foxconn Remain Apple’s Top Supplier of iGadgets?

Apple is famous for its attractive and highly prized electronics, including
iPhones, Mac computers and laptops, and iPad tablets. However, Apple doesn’t
actually make any of its products. Rather, it develops ideas, designs
devices, and promotes the products and its brand. To put the devices
together, Apple relies on a set of contractors.

One key contractor is an electronics firm called Foxconn, based in Taiwan.
With factories located in China, Foxconn has combined manufacturing
expertise with low-cost labor to win deals to make computers and key
components such as motherboards. As consumers have slowed their spending on
laptop computers in favor of smaller devices such as the iPad tablet
computer and smartphones, Foxconn has benefited. Until recently, it was the
only company making Apple’s iPad and one of just two makers of Apple’s
iPhone. Workers at Foxconn facilities also produce the Sony PlayStation 3,
the Nintendo Wii, and Amazon’s Kindle Fire.

Foxconn also produces TVs for Sony, Sharp, and Toshiba. In China alone,
Foxconn employs almost 1.2 million workers, making it one of the largest
employers in the world. Many workers in China live in on-site dormitories,
eat in company-run dining halls, and relax in bookstores and gyms at their
workplace.

Foxconn has experienced some tragic problems. In 2010, the company drew
international media attention when several workers at Foxconn’s plant in
Shenzhen (a city in southern China) committed suicide. Questions arose about
whether working conditions were so horrible as to drive workers to kill
themselves. Apple sent executives, accompanied by suicide prevention
experts, to the plant to investigate. Although Apple requires its contract
partners to meet specific standards in its code of conduct, and it visits
over 100 facilities a year to ensure compliance, it had failed to uncover
any problems at Foxconn before the suicides came to light.

The next year, Foxconn was again in the news about another tragedy when an
explosion in its Chengdu, China, plant killed 3 workers and injured 15.
Initial investigations suggested that the explosion was the result of a
fairly basic manufacturing safety problem: Because of improper ventilation,
dust collected in the air of a metal-polishing shop, and the dust ignited.
If such a problem occurred in the United States, regulators would quickly
shut down the facility for violating safety requirements.

Embarrassed by the media and pressured by important customers including
Apple, Foxconn acted to improve working conditions. At the Shenzhen plant,
it brought in counselors, improved training of managers and staff who
answered calls on the employee hotline, and launched a morale-boosting
program called Care-Love that sponsors employee outings. In the factories in
Chengdu and elsewhere, the company took measures to improve ventilation.
Along with these changes, Foxconn began giving out raises, and Shenzhen
workers’ wages more than doubled.

After Foxconn launched its efforts to improve morale, employee turnover
fell, and the suicides seem to have ended. Financial impact on the company
is difficult to measure. Higher costs erased profits, and Foxconn’s stock
price tumbled. So, the company looked for lower-cost locations. It opened
facilities in China’s interior cities, where wage rates are about one-third
below those of Shenzhen. Making matters more challenging for Foxconn is the
fact that it intends to cut nearly $3 billion from its operating costs,
which will likely result in layoffs. The news comes on the heels of reports
that Apple’s iPhone XS, XS Max, and XR didn’t sell as well as expected in
2018.

Apple CEO Tim Cook shifted some of the production of iPhones and iPad minis
to Pegatron, another Taiwan-based electronics manufacturer. Pegatron also
makes products for Microsoft, Dell, and Hewlett-Packard.

Foxconn also made news in the United States, announcing in early 2021 that
it would manufacture electric vehicles in Wisconsin for EV start-up Fisker.
Groundbreaking for a huge project was several years earlier, when Foxconn,
Governor Scott Walker, and President Trump announced a planned LCD factory
that would create a manufacturing juggernaut to be called Wisconsin Valley.
But Foxconn failed to meet construction, employment, and other benchmarks,
and scrapped its projected product ideas. The project foundered.

Meanwhile, Foxconn announced it was moving a significant amount of its iPad
production to Vietnam, and Pegatron was poised to begin iPhone manufacturing
in India.

Perhaps the Foxconn-Fisker deal will rescue one of the country’s biggest
economic development projects. Foxconn planned to begin production in late
2023 for Fisker’s second EV model, a high-volume operation targeting markets
in the United States, Europe, China, and India.

Last Completed Projects