Question

Book: Global Business Today (9th Edition), by Charles W.L. Hill and G. Tomas M. Hult.

Ch. 1 Case Study (pg 32-33): Who Makes the Apple iPhone?

4. On the balance, do you think that the kind of outsourcing undertaken by Apple is a good thing or a bad thing for American economy? Explain your reasoning?

Answer 1

Ans: In some respects, outsourcing to China probably keeps company and consumer costs down, which helps very strongly at the growth of the company. As costs get lower, prices get lower and not surprisingly, demand increases. As a result, company is earning profit, allowing Apple to spend more money on research and innovations to create more products in the United States. Everyone would probably agree that Apple needs tocontinue monitoring the working conditions at its Chinese assembly plants to ensure thatworkers are being treated fairly and not subjected to poor living and working conditionsas well as working long hours without additional pay. But, if Apple keeps doing so then the economy of America will reach a very poor state. Chinese workers do deserve proper monitoring and proper working conditions. But, this is just helping the Chineseeconomy to grow, not the American economy. America's national economy gets damaged because of outsourcing to China. The American unemployment rate increased, citizens do notspend money, consumptions also decreased. Moreover, it's a blockage to the American economy.

In short, the kind of outsourcing undertaken by Apple is a bad thing for the Americaneconomy. Although they do have some positive points. But those good or positive things are not much enough to keep the American economy at a stable situation.