Strategic Analysis of Apple Move Production Out of China Assignment

Read the Article “Apple Makes Plans to Move Production Out of China” (in Blackboard, also atached), review assignment specifics below and prepare a report on the company

Background: Apple’s most successful product, iPhone (52% of total Apple revenues in 2021), is designed and sold by Apple. However, its components are made by many companies around the world and assembled by Taiwan-based Foxconn in their mainland China facilities. It is estimated that over 90% of iPhones are assembled by Foxconn, and a very small fraction are assembled in Vietnam and India. In the recent months, Apple has accelerated plans to shift some of its production outside China, telling suppliers to plan for assembling Apple products elsewhere in Asia, particularly India and Vietnam. Apple also seeks to reduce its dependence on Taiwanese assemblers like Foxconn. Thus, Apple will draw from a bigger pool of assemblers, even if those companies are themselves based in China. Two Chinese companies in line to get more Apple business are Luxshare and Wingtech. 

There are these following key 3 learning objectives:

• Understanding how Geopolitical issues affect management decisions and operational strategies
• Learn international factors in making decisions regarding location(s) selections
• Understand product life cycle (PLC) and new product introduction (NPI) and strategy implications

Assignment Instructions

You will need to follow these instructions completely; failure to do so will result in points deductions. 

Apple is in several markets, smart phone, smart watch, computers, tablets, etc.; only discuss the iPhone business in this assignment.

1. Your Report will be submitted in Word format (not in pdf). Use TNR 12 font and 1.15 spacing.
2. Report Outline is provided below, and you must include all main topics in your Report with proper headings and sub-headings, as described below. You are encouraged to additional items. Your Report should have no more than shown # of Pages for each Section.  
3. Main body of the Report must be in a narrative format and all figures, charts, exhibits must be included in the Appendix with proper references.
4. Use MLA Style for all Work Cited.
5. You will receive comments on your Part I submission, and I expect you to make appropriate revisions when you submit the Final Report (Part II).
6. Your Final Report must be an effective reading, reflect sufficient attention to research data, analysis, and presentation. Must pay attention to structure and format of the Report.

1. Introduction and Context

(Discuss the company, smart phone industry and the Situation as described in the Article. Provide a Context. Do not write one long paragraph, break it up for an effective reading)

2. Apple

1. Business and Strategy

(Briefly describe Apple’s smart phone business and its Corporate and Business Strategy; research their website, annual reports and investors presentations)

2. 2017-2021 Financials and Analysis (management ratios)

(Go to https://www.apple.com/ search for 2021 Annual Report under the Investors Relations. Get 5-year financial performance data (2017-2021) and calculate minimum 8 key Management Ratios (see Table 4.1 in textbook). Discuss briefly these ratios relating to their Strategy); break out and nalyze iPhone data as much as available

3. Value Chain Analysis

(Using Chapter 4 discussion of the Value Chain, describe key activities performed by the firm and their suppliers/contractors/licensors)

4. Competitive Advantages and Sustainability

(Using the Article, Items b and c above, and additional research, identify the firm’s Competitive Advantages, develop a Competitive Positioning Matrix, see Notes 3, discuss sustainability of these advantages, use either VRIN or VRIO framework)

3. Smart Phone Industry and Analysis

(Discuss briefly overall PESTEL and industry factors and trends).

1. PESTEL Analysis

(Identify key factors that will have an impact on the Industry; do research)

2. Industry size, trends

(Research and discuss Industry size, growth rate, profitability, life cycle, key drivers)

3. Competition

(How is the competition structured? Concentrated? Fragmented? Use Five Force Model to discuss the competitive intensity)

4. Global Context

There are 3 components to address locations selection: Locational Advantages; Institutional Distance and Cultural Distance

a. Understanding Locational Competitive Advantage

Chapter 7 in your text book has a good discussion on this topic and the use of Diamond Model. For this Report, you will address Factor and Demand Conditions for these countries: China; India; Vietnam and Mexico. Complete this Table for country, with data and discuss.

b. Institutional Distance

(Understanding institutional distance, i.e. the difference in institutional context between countries, is critical for firms whose operations span national boundaries. Institutional distance impacts the relative attractiveness of country markets, risks, trade-offs among foreign market entry strategies, the management of subsidiaries abroad, and ultimately, firm performance.(Bae and Solamon 2010)  Institutional distance is a measure of cross-country differences (Kostova & Zaheer, 1999) and refers to “the extent of similarity or dissimilarity between the regulatory, cognitive, and normative institutions of two countries” (Xu & Shenkar, 2002, p. 608). Similarities between countries can attract, facilitate and expand trade; dissimilarities can provide a challenge and a higher level of risk. 

Several ways to assess institutional distances between different countries. For this assignment, you will research and find data about a few dimensions: (i) Governance Indicators; 

(ii) Infrastructure ranking; (iii) Financial Institutions Index; and, (iv) Education system ranking

Governance Indicators: Following World Bank site will give you data regarding World Governance Indicators https://info.worldbank.org/governance/wgi/Home/Reports You can select all or a few relevant indicators and plot data for US, China, India, Vietnam and Mexico. Take the latest year data (e.g. 2020). These indicators are for

• Voice and Accountability.
• Political Stability and Absence of Violence/Terrorism.
• Government Effectiveness.
• Regulatory Quality.
• Rule of Law.
• Control of Corruption.

c. Cultural Differences Analysis

(Another critical factor in the international trade/business is an understanding of cultural differences. Go to https://geerthofstede.com/culture-geert-hofstede-gert-jan-hofstede/6d-model-of-national-culture/ Review 4 cultural dimensions (PDI, IDV, UAI, MASC) and discuss your observations regarding Cultural (also known as Psychic) Distance)between US, China, Vietnam and Mexico.)

5. The Situation, Options and Recommendations

a. The Situation

(Describe the Situation faced by Apple as discussed in the Article and your analysis in previous Sections. First list key points (no more than 6) such as Supply Chain, Productivity, Governmental Actions, etc. and then briefly discuss each.)

b. Apple Options

(Identify and briefly discuss 2 or 3 strategic options available to Apple). These Options must be mutually exclusive.

c. Recommendations

Evaluate these strategic options with pros and cons (use a table format) and recommend one.

6. Learning Points

(List and discuss your learning points from this assignment, relate to the class discussion)

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