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APPLE AND ITS SUPPLIERS�CASE COMPETITION 

Ryan Carlin, Ellie Carrier, Abbey Conrad & Stephen Sloan

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THE CHALLENGES

  • Combating the negative feedback that Apple is receiving regarding irresponsible labor within China
  • Maintaining close buyer-supplier relationships
  • Working with a wide array of suppliers to fulfill its "promise"

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PLAN OF ACTION

  • Improve day to day management
    • Basic health & safety training
    • Standardize work hours
  • Create a price floor to standardize trade
    • Discourage price cuts for suppliers

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COMPANY ANALYSIS

Strengths

  • Strong brand image
  • High profit margins
  • Effective rapid innovation processes 

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Weakness

  • Limited distribution network
  • High selling prices 
  • Dependence on high-end market segments

Opportunities

  • Expansion of the distribution network 
  • Higher sales volumes based on demands
  • Development of new product lines

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Threats

  • Aggressive competition 
  • Imitation 
  • Rising labor costs in various countries 

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COMPANY CULTURE ANALYSIS

  • "At Apple, we believe in making complex things simple." 
  • Tim Cook helped create an efficient supply chain in China
  • Cannot change diverse national environments to suit its own purpose

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CUSTOMER ANALYSIS

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APPLE'S IMPACT ON CHINESE ECONOMY

  • Apples impact on Chinese Economy
  • 90% of apple production in China
  • 4.8 million Chinese employees
    • 1.6 million at Pegatron
  • $600-800 dollars per month
    • Chinese monthly minimum wage: $369
  • $200 billion dollar tariff

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COMPETITOR ANALYSIS

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Outsourcing 

60 millions units of Galaxy A and Galaxy M series 

500,000 units per day at Foxconn

240,000 skilled workers

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50% production in Vietnam

90% of production in China

Criticisms

50 women surveyed from Vietnam Facility

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Neglect of safety regulations and training

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IMPLEMENTATION

Work with China's government to enforce labor laws

Create working standards with outsourcing companies

Implementation of on-site training

Keep transparency with Apple customers

Day-to-day management 

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CITATIONS

  • Beres, Damon. “IPhone Assembly Workers Would Have To Spend A Month's Pay To Buy An IPhone.” HuffPost, HuffPost, 19 May 2016, https://www.huffpost.com/entry/pegatron-iphone-workers_n_573dcb39e4b0aee7b8e91e21
  • Kubota, Yoko, and Tripp Mickle. “Apple Explores Moving Some Production Out of China.” The Wall Street Journal, Dow Jones & Company, 20 June 2019, https://www.wsj.com/articles/apple-examines-feasibility-of-shifting-some-production-out-of-china-11561030751.
  • “Shanghai's Minimum Wage to Increase April 1.” China Briefing News, 2 Apr. 2019, https://www.china-briefing.com/news/shanghais-minimum-wage-increase-april-1-2019/.
  • Okapi Research. “Apple: A China Problem Or An IPhone Problem?” Seeking Alpha, Seeking Alpha, 15 Jan. 2019, https://seekingalpha.com/article/4233555-apple-china-problem-iphone-problem.
  • 于小明 . “Half of IPhones Manufactured in Central China's Zhengzhou City.” Half of IPhones Manufactured in Central China's Zhengzhou City - Business - Chinadaily.com.cn, https://www.chinadaily.com.cn/business/tech/2017-09/19/content_32191283.htm.
  • Writer, Staff. “Apple Weighs 15%-30% Capacity Shift out of China amid Trade War.” Nikkei Asian Review, Nikkei Asian Review, 19 June 2019, https://asia.nikkei.com/Economy/Trade-war/Apple-weighs-15-30-capacity-shift-out-of-China-amid-trade-war.
  • Staff, Reuters. “Apple Is Giving Employees Each $2,500 in Stock as Bonuses.” Business Insider, Business Insider, 17 Jan. 2018, https://www.businessinsider.com/apple-is-handing-out-2500-stock-bonuses-to-employees-2018-1.
  • Maggio, Edoardo. “Workers at an Apple Manufacturing Plant in China Complained about Poor Working Conditions and Exposure to Noxious Chemicals.” Business Insider, Business Insider, 17 Jan. 2018, https://www.businessinsider.com/china-labour-watch-apple-catcher-working-conditions-2018-1.

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