shore and outsource production communication comparative advantage and set up

Shore and outsource production communication

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shore and outsource production, communication, comparative advantage, and set-up costs would be positives. Control would rank on the positive end but not to the same degree. Labor cost would be a negative as it would be relatively more expensive than the offshore options. If Apple 8 Apple and its suppliers: corporate social responsibility, 2016, Richard ivey School of Business Foundation 6
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chooses to offshore and insource, Labor cost would be low, control would be high, and communication would be high; however, comparative advantage would be low and setup costs would be high. And finally, in choosing to offshore and outsource, labor cost and setup costs would be low, comparative advantage would be high; however, control and communication would be low. Neither onshoring and insourcing/outsourcing will significantly impact Apple’s objective of maximizing revenue. With the unethical practices occurring in Apple’s global supply chain, customers are still loyal to the brand. In 2014, a study involving 3,000 people revealed that 78% of participants stated they “couldn’t imagine having a different type of phone and 60% declared they had “blind loyalty” to Apple 9 . In western society, humanistic disparities are mostly glossed over by consumers in the short term. If corporations take minimal responsibility, but the customers still receive the product, then things generally move smoothly. Brand image may be damaged; however, customer loyalty is so high for Apple that negative PR does not significantly impact sales revenue. The Chinese Labor Watch (CLW) exposed Pegatron in 2013, yet Figure 1. shows that sales revenue still increased. Onshoring and insourcing to the U.S. would bring minor change to sales revenue, but would increase expenses drastically. The greatest benefit for offshoring is that Apple can maximize revenue and cash flow. In 2016, Apple CEO Tim Cook announced he would not bring back business operations until taxes were more favorable to businesses, as Apple had $230 billion in offshore accounts. If he brought operations back to the U.S., than 40-50% of that money would be lost to taxes 10 . Losing 40% of $230 billion can drastically affect the resources a company has to invest in R&D and future projects. Onshoring and insourcing would benefit the country, but not Apple. Limited investment and R&D would mainly hurt their competition in the market. It would be a questionable decision to endure such penalties. The same outcome will stem from insourcing. 9 Apple and its suppliers: corporate social responsibility, 2016, Richard ivey School of Business Foundation 10 Erb, Kelly Phillips. “Apple CEO Says Company Won't Bring Home Money Parked Overseas Until Tax Rates Are 'Fair' ” Forbes. 17 Aug. 2016. - ceo-says-company-wont-bring-home-money-parked-overseas-until-tax-rates-are-fair/#29b4a1221667 7
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Insourcing and onshoring would eliminate many of the financial benefits Apple has received since 2004 from its 200 global suppliers. Apple’s global strategy makes it difficult to make deadlines for last minute orders. China suppliers can hire 3,000 workers overnight to work
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