apple outsourcing benefits
Of course, this being hyper-tight-lipped Apple, the company won’t say exactly what Cook meant when he said he’d like to see Apple products made in the United States. 1. Le’s U.S. manufacturing strategy has worked well for him so far. Focus instead on the way it does business, and all those iPhones, iPods and iPads aren't just exemplars of design and user-friendliness: they are devices that destroy western jobs. Apple is only selling their products to the American people; they are not giving back to them in any other way. “Apple has been on the record saying they simply couldn’t get that kind of responsiveness here. But today, with Chinese wages rising, the reasons that companies manufacture there are far more complicated. His production crew of about 15 works on the colorful and smartly designed desktops in between machining precision parts for the semiconductor, medical device, aerospace and defense industries. An old rule states that you are only six degrees of separation from anyone else on the planet. If Le’s company were sitting anywhere else in the country, it might be hard to take his optimism seriously. Minh Do Le died at age 50 in July 2011. Outsourcing refers to the company business, in which one organization use business functions for external... Benefits:. The cost of labor per hour in China is... See full answer below. That’s like creating a small town overnight.”. As Cameron knows, Apple is a byword of everyday sleekness. The benefits to Apple of outsourcing the assembly of the iPhone to foreign countries include reduction in the cost to Apple as Chinese labor is available at a lower cost as compared to American labor as China has the largest population in the world. Additional Apple Card Monthly Installments and iPhone Payments terms apply. Eastern Europe, India and Asia are the most frequent choices … Expert outsourcing advisory, support & brokerage for your business. And they do so needlessly, because if the California-based giant manufactured its goods in America rather than China, it could still make profits that would be the envy of every other US business. This is not just my conclusion, or that of the Cresc team; it is backed up by the Asian Development Bank. The pros and cons of outsourcing to China cannot be based on labor alone any longer. Pegatron is another company rounding out the Taiwan lineup. But Tsay says any notion that Apple will start assembling iPods, iPhones and iPads in the United States is sheer fantasy. But some of the factors are smaller and closer to hand, like the iPhone in your pocket or the Mac waiting for you at home. Or perhaps you're viewing it on an iPhone. That pile of shares is now valued at about $US634 million. White Leaf builds computers right here in Silicon Valley as part of founder and CEO, Andrew Le's vision of bringing jobs and manufacturing back to the United States. And if you've really never done any of those things, rest assured your prime minister has. There are certain financial advantages that can still be obtained, but additional benefits need to be in place for outsourcing to be a future benefit. “Foxconn has hundreds of thousands of employees in their industrial park. Competitive demands and the pinpoint timing of major product launches mean that Apple wants those workers, or the companies employing them, to be able to ramp up at warp speed and turn on a dime. Hai Hoang, left, and Hugo Garcia inspect a machined component at the White Leaf USA computers manufacturing plant in Santa Clara on Aug. 22, 2012. This is the accepted logic of globalisation, which lets companies keep costs down, which allows the ordinary westerner to spend less money shopping, and which offers poorer nations in the east a means to develop their economies. ... Outsourcing factors work on very thin margins, because high … “Our goal is to show that it can work.”. Sorry, your blog cannot share posts by email. SANTA CLARA — At the end of a cul-de-sac in an industrial stretch near the freeway here, Andrew Le looks out over a concrete shop floor where he is pursuing an ambition that few in their right minds would tackle in 2012: manufacturing desktop computers in the heart of Silicon Valley. “One of her biggest things was that she wanted to take care of her employees and she wanted to open up opportunities for people in the U.S., in an industry that she loved,” Le says. (Gary Reyes/ Staff). Everybody but Le knows that, anyway. For some people, however, the world is even smaller. And Le has some pricing advantages that Apple doesn’t enjoy. Even Apple CEO Tim Cook hinted recently that the Cupertino giant is scheming to bring some production work back home. For many countries that struggle with poverty and war, … The most admired man in Silicon Valley was reportedly blunt: "Those jobs aren't coming back.". What he and his employees came up with was a line of desktop computers in black, blue and pink that are compact — about 9 inches by 8 inches by 4 inches for the smallest model — and retail for $420 to $1,500. By locating the same iPhone factory in America, Apple would add more than $25 billion in labor costs a year, which would completely wipe out Apple’s 2010 profit of $14 billion. Apple gets a lot of stick about manufacturing in China, and the issue came up again recently with the release of the iPhone 5. However, it should at least, be considered by every business. Manufacturing, he added, was not one of those things. And it’s a key reason why such large-scale manufacturers are not coming back to the Bay Area. Indeed, it was so much money that the company was stumped how to dispose of it. Among other people who benefited from this arrangement was Cook himself, who was awarded $US376.3 million in Apple stock when he took over last year. Outsourcing creates CAREER opportunities. So: two models of making one of Apple's most popular products, and two models for distributing the profits. So let me propose an amendment: you are only one relative, friend or acquaintance away from one of the late Steve Jobs's creations. “There are things we can do,” Cook said in May at the D: All Things Digital Conference, “and that’s what we are working on.”. And according to new research by the Centre for Research on Socio-Cultural Change (Cresc), it's clear that it would not only be affordable for Apple still to make its goods in America, it would remain hugely profitable. Last year, Apple built up cash reserves of $US100 billion - more than the US government. This allows you to... 2. The fact that manufacturing capabilities are outsourced should not be taken against Apple. In January, the New York Times ran a lengthy investigation of the technology firm's manufacturing processes, which began by disclosing a conversation in 2011 between Jobs and Barack Obama. Benefits of outsourcing, not solely for Apple, but in general, include less cost and cheaper raw materials. ... you have to pay benefits, insurance, higher taxes. Contact Mike Cassidy at firstname.lastname@example.org or 408-920-5536. It subcontracts work that offers the Chinese little prospect of economic development, while at the same time selling to Americans and others products they want but increasingly don't have the jobs or incomes to buy so readily. “And so we wanted, or at least I wanted, to honor her, to continue that.”. US workers weren't skilled enough; not enough of them were trained in engineering. The Cresc team took the average wage in the US electronics industry of $US21 per hour and calculated that the total production cost would increase to $US337.01. China is the best fit for Apple Apple’s decision to outsource its manufacturing to China is really about who can build the most number of Apple products within the shortest amount of time. In the case of Apple, outsourcing manufacturing is not about keeping costs to customers down - they are still paying huge prices for the latest handset or tablet computer. An example of the superior responsiveness, in assembly, to Apple’s needs is the impressive speed and flexibility of … Former Apple CEO Steve Jobs believed that jobs could be created in the United States even though his company’s major manufacturing base was overseas. That is a big jump - but it still leaves Apple with a gross margin of 46.5 per cent on each iPhone - a level that Cresc's Sukhdev Johal estimates would probably still make it the most profitable phone in the world. Jobs responded, “They are not coming back home,” according to … So, think of Apple as mature and modular. 1 Reason We Make iPhones in China (It's Not What You Think) China is much more than a … Apple, the most valuable and most profitable company in the world, had been paying a corporate income tax of 5 percent or less thanks to a loophole in … And while robots can be pliable workers, they are a fixed cost — a drag on the bottom line, whether they are working or not. White Leaf produces a relatively few early-iteration computers with several hardware and software configurations — a model suited to a small workforce on production lines close to designers and executives making the final decisions. After that, and the terrible publicity that followed, Apple put pressure on its subcontractor to raise workers' pay and improve conditions. The next one that gets the most benefit from this outsourcing is Chinas economy. Those production jobs tend to be in small operations, relying on automation and making early iterations of high-tech devices or producing highly specialized products. Apple has made and benefited from that argument. Outsourcing is the business practice of contracting with an outside party to take care of certain tasks instead of hiring new employees or assigning those tasks to existing staff. In addition to Apple, who else benefits from Apple’s decision to outsource assembly to China? Step-by-step solution: Chapter: Problem: FS show all show all steps. Tim Cook, who is now CEO of Apple, announced a few weeks ago that he would begin buying back shares and paying dividends to investors. Like every other PC-maker, Le would kill for Apple’s profit-margin on its Macs, which analysts say is likely higher than 30 percent on the machines, which start at $999. 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