1. Read the case entitled “Who Makes the Apple iPhone?” on page 33.
2. Answer the following questions in three pages.

1. What are the benefits to Apple of outsourcing the assembly of the iPhone to foreign countries, and particularly China? What are the potential costs and risks to Apple?
Lower labor cost is one of the most basic reasons but as the case points out, that was only a small consideration.
Apples ability to scale production up/down very quickly and even with short based on demand and based on product cycles seems to be one of the greatest benefits. China has more capacity, flexibility and seems to be willing to take larger risk to win business. This is evident in the article with the plants willingness to begin scaling
Additionally, there could be negative backlash in that what was previously a proud American made produce is now made in China. There is risk that consumers might view this in a negative way. To address this, I think Apple needs to focus on product quality and ensuring that product deadlines are met and that they can go to market with a quality product on time. In doing this, Apple can fairly safely defend their position by saying they needed to go to China and Foxconn to provide a superior product on time. While Apple may still lose some customers as a result of going offshore with their production, they most likely will win new customers with their delivery of innovative and reliable products.

4. On balance, do you think that the kind of outsourcing undertaken by Apple is a good thing or a bad thing for the American economy? Explain your reasoning?
On one hand it is bad because of the loss of jobs. It is never a good thing at least for an American companies perception to send jobs offshore. Unfortunately times, it is necessary for a company to remain cost competitive to do so. Also, because of the unique nature of the product being made and the fact that the parts and the product itself are so highly technically advanced, it is also a negative thing to see those types of opportunities going to other countries as it leads people to believe (and perhaps there is truth to it) that the American industries cannot compete at a