Companies doing business internationally deal with complex sourcing and supply chain issues. Unfortunately, many multinational corporations have failed to include Corporate Social Responsibility practices in their global operations. Due to a number of international human rights disasters resulting from lack of supply chain auditing, corporations are rapidly becoming more transparent and are adopting globally accepted codes of conduct.
Instructions
Read the case study on Foxconn (pg. 272) in the textbook. In a well-written paper, respond to the following issues:
- Explain why a firm is responsible for its supply chain. If the answer is that a firm is not responsible, discuss an organization that exemplifies this. If the answer is that the firm is responsible, then how far down the supply chain does this extend (i.e., to immediate suppliers, the suppliers’ suppliers, or beyond)? Support all claims or assertions with scholarly research.
- Why does Apple continue to source its production to overseas firms such as Foxconn? What advantages, if any, does this generate for Apple? What are the disadvantages, if any, that result from this relationship? How could Apple have avoided the threats identified? Overall, do the benefits of Apple’s decision outweigh the costs? Support your opinions with scholarly research.
Solution
Introduction
In the global business, there are many complications regarding supply chain process. The firm has to maintain some strategic considerations to enable the business sustainability and maximize the profitability for a long run. In this contemporary business, the firm is quite responsible for supply chain process. It seems the responsibility of the form to contain some ethical and strategic considerations. Supply chain operations are to be shaped effectively by the management. Interestingly, Apple’s preference regarding the supply chain props is different. It has considered overseas firms such as Foxconn. It seems a comprehensive analysis along with some prominent insights.
Why a firm is responsible for its supply chain
The supply chain management is the responsibility of the firm. In the modern business, many global business operations failed due to lack of CSR initiatives and ethical considerations in the supply chain process. The firm wants to contain the effective flow of the products and service, and due to effective supply chain strategies, some predictable results can be streamlined. For Instance, the company management always looks to collaborate with different suppliers to maintain the good relations. Improved corporate social responsibility can improve relations with suppliers. Of course, it also enables the long-term supplier sustainability. The main preference of the company is to make the supply chain responsible for ensuring the high product quality. The inclusion of the corporate social responsibility helps to come up with some sustainable products (Asgary & Li, 2016). Thus, shaping the supply chain process is a prominent responsibility of the company to enhance the visibility of the sustainable products according to expectations. In global operations, it seems the responsibility of the firm to depict its alignment with the international CSR guidelines and standards. It depends on the firm how it undertakes these initiatives and enables the effective and efficient flow of the product. The supply chain mapping has been emerged as a key responsibility for the company management, as it helps to realize CSR policies or guidelines. Transparency and visibility are some key ethical considerations, which also justify the supply chain mapping. In this modern business era, it has been observed that customers want to know the suppliers of goods. Thus, the responsibility is to streamline the process for clients to ensure the transparency and come up with some outcomes, which are according to expectations. Several images are to be occurred in the supply chain management process, especially in the global business operations. The company is quite responsible for identifying these risks and making some key decisions to make the difference. Now, with the perspective of suppliers, some considerations are in the limelight, which shapes the responsible supply chain management process (Awaysheh & Klassen, 2010).
How far down the supply chain does this extend?
In today’s business world, the main intention of firms is to depict the concentrated suppliers. The supplier consideration is the significant factor in the management of the company to ensure the efficient flow of products and services. Increasing the number of immediate suppliers is necessary to reach destinations. To manage the immediate suppliers, the supply chain management usually determines the cost and the value of the supply chain process. Immediate suppliers are to be evaluated by the firm, and through determining the cost and the value of the raw material to end product or services, it can be easily done. It is the top responsibly to satisfy all key stakeholders as well. When managing immediate suppliers, the firm usually estimates different efforts or contributions of suppliers. Streamlining suppliers offering to the company is a good approach instead of shaping the supplier behavior. In this rapid business era, the company evaluates supplier dynamics and enhances the visibility of the contribution. Sharing the information with the supplier is helpful in getting the immediate response immediate supplier considerations needs an integrated system. Normally, organizations are tech savvy, and use of several types of equipment to share information is a source of immediate response. However, supply chain responsibility also expresses the contingency planning. Certain events are to occur in the supply chain management process. For Instance, unavoidable events must be practiced or planned when managing the immediate suppliers (MacCarthy, Blome, Olhager, Srai, & Zhao, 2016).
Now, some insights from the case study of Apple Inc are to be elaborated to understand the supply chain importance, responsibility, and long-term considerations.
Why does Apple continue to source its production to overseas firms such as Foxconn?
Apple continues to source its production to overseas firms such as Foxconn. The purpose is to contain the rapid production in different regions and meet needs of customers. The big reason is the reduction in cost due to the low-cost labor. Furthermore, Foxconn is quite capable of a maximizing the production according to needs. Due to adequate resources and capabilities, Apple Inc has built trust on this company in China. For Instance, Apple Inc is a great improviser, as some changes are made in the production of iPhone. Foxconn is capable of embracing the change immediately and meet the goals and objectives of the Apple Inc (Miemczyk, Johnsen, & Macquet, 2012).
Advantages of Apple Inc
The big advantage of Apple regarding these outsourced operations is the swiftness. On the emergency basis, Apple Inc has to accelerate production of I Phones and many other consumer electronic products. The cheap labor cost in China has helped the company sustain its profitability and revenue streams. The firm administration has managed to depict the strategic relationship with this supplier in China. In short, due to the flexible manufacturing, Apple Inc can make changes, alter the process, and extend the contract with this immediate supplier.
Well, regarding the corporate social responsibility and business ethics, Apple Inc is facing several issues. The illustration of disadvantages is as under.
Disadvantages for Apple Inc
Foxconn employee practices are not up to the mark. Employees are struggling due to overwork and lack of work-life balance. Apple Inc is facing the negative perception in the technology market due to the poor employee management practices. Employee strikes, rioting, and pay discrimination are some issues that Foxconn is facing (Roberts, 2003). Ultimately, it is creating the negative impact on Apple. It seems the prominent disadvantage, as stakeholder perceptions regarding the ethical supply chain process. Being a top technology company, the supply chain management process is the responsibility, and so far, the company failed to demonstrate or fulfill it through implementing CSR and ethical implications (Asgary & Li, 2016).
Result of relationship
The result of the strategic relationship with the supplier is the agreement. For Instance, along with the third-party audit, both organizations managed to identify and improve the process. Foxconn is now committed to increase wages and redesign working conditions for employees. Employees will be working 9 hours overtime in a week only. Both companies understand the importance of employees and legal implications, and therefore, they are agreeing to make these changes. Apple Inc is looking to impose the pertinent working condition in Foxconn, which can enable the employee retention and satisfaction. Instead of focusing on the production and profit maximization, integrating with employees’ needs seems ethical. Streamlining the social responsibilities and business ethics are some results of this strategic relationship (Awaysheh & Klassen, 2010).
Avoidance of identified threats
The identified threat is the reputation. It has been revealed that western firms such as Apple Inc are willing to operate in the low-cost environments. However, the reputation the can be avoided through integrating with the local code of conduct. Apple Inc is looking to work with this contract manufacture to sustain its reputation and perception (Roberts, 2003). In the contract manufacturing, there are some violations, and both firms must have to combine efforts to avoid all possible threats, especially the company reputation. Outsourcing is a need of Apple Inc, but it should be well directed and designed through aligning with CSR and ethics (MacCarthy, Blome, Olhager, Srai, & Zhao, 2016).
Benefits of Apple decision overwhelming costs
Yes, Apple‘s decision increases the cost of operations. Directing of designing new working condition seems costly that can hit the profitability. However, to sustain the image the firm has to compromise. Increasing the pay, external audit, shift in employees, and reductions in overtime go in favor of employees. It increases the overall cost of production. Interestingly, Apple Inc is utilizing the skimming pricing strategy in the technology market, as due to the good brand image and perception, customers are willing to pay high prices. Thus, accordingly, the firm can make some adjustments (Miemczyk, Johnsen, & Macquet, 2012).
Conclusion
In the end, it is to conclude that there is a strong relationship between outsourcing and ethical business considerations. Apple Inc has evolved when dealing with the contract manufacturer. Production efficiency and profitability are two strategic goals. However, aligning business strategies with the corporate social responsibility and business ethics is crucial. Modern organizations must have to take the responsibility of the supply chain process. Global operations need the good reputation of the company that can facilitate the business growth and sustainability. From supply chain responsibility to contact manufacturer, ethics and responsibility are two sources that create the impact on the business performance.
References
Asgary, N., & Li, G. (2016). Corporate Social Responsibility: Its Economic Impact and Link to the Bullwhip Effect. Journal of Business Ethics, 135(4), 665-681.
Awaysheh, A., & Klassen, R. D. (2010). The impact of supply chain structure on the use of supplier socially responsible practices. International Journal of Operations & Production Management, 30(12), 1246-1268.
MacCarthy, B. L., Blome, C., Olhager, J., Srai, J. S., & Zhao, X. (2016). Supply chain evolution – theory, concepts and science. International Journal of Operations & Production Management, 36(12), 1696-1718.
Miemczyk, J., Johnsen, T. E., & Macquet, M. (2012). Sustainable purchasing and supply management: a structured literature review of definitions and measures at the dyad, chain and network levels. Supply Chain Management, 17(5), 478-496.
Roberts, S. (2003). Supply chain specific? Understanding the patchy success of ethical sourcing initiatives. Journal of Business Ethics, 44(2/3), 159-170.
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