Case Study: Globalization, US-China Trade War, Apple and Foxconn

This case study examines the impact of globalization, particularly focusing on the relationship between Apple and Foxconn within the context of the US-China trade war. It explores how globalization facilitates collaborations and strategic partnerships across borders, leading to technological advancements, increased market reach, and heightened competition. The study highlights the challenges faced by Apple due to trade tariffs and regulations, including restricted trade with China, diminished market share, and the rise of competitors. Conversely, it acknowledges the opportunities presented by globalization, such as access to cheap labor and the potential for political stability in new markets. The analysis also discusses the contributions of outsourcing and offshoring to business, including cost reduction and innovation, while recommending collaborations with third-party organizations to mitigate risks and reduce costs. The case study concludes that while globalization supports business growth, political shifts can significantly affect operations, necessitating strategic adaptations.

Globalization and
business
A case study of Apple and Foxconn in the context of
US- China Trade War

Globalization
•Globalization is mainly focused on shared interests of
the different economies
• Aims at improving their position through
collaborations and strategic partnerships across
borders

Impact of Globalization on current
day businesses
• Transmission of technologies and business ideas for the better
development of the systems
• Increased scope of marketing operations and the interconnectedness
• Increased competition, technology and knowledge transfers, growth
of mergers and FDIs for improving the economic situation of the
countries in a collaborative manner

Knowledge needs of international
managers
•Knowledge on organizational processes, structure and market trends
•Technological knowledge for continuous improvements
•Conflict resolution in cross- cultural teams

Contributions of outsourcing and offshoring to
globalization
• Helps in developing continuous innovations
• Supports in minimizing the cost of production and risks associated
• Empowers R&D operations for increased innovativeness
• Development of an integrated process of communication,
transportation and trade among regional and international economies
• Collaboration between the different organizations resulting to mutual
growth and development

Background of Apple Inc.
• The concerned business, Apple Inc., is an
American multinational technological organization
• It is headquartered in California and aims at developing a range of
consumer electronics and online services
• The revenue of the organization was estimated to be
US$265.595 billion
• The operating income was US$70.898 billion as computed by the end
of the fiscal year 2018 (Apple 2019)

Case study: Apple and Foxconn
• Apple has been facing a considerable amount of issue in the current years due to the US-
China trade war which affected the line of production that was undertaken by the concerned
organization in partnership with Foxconn, a Chinese organization
• The trade tariffs also affected the range of production related operations of Apple and
thereby the organization incurred heavy tolls on goods worth billions
• Apple also faced significant issues in improving trade with China through the increased trade
regulations which diminished their market share from 6.4% to 5.8% in China
• The potential political barriers and the trade tariffs, created by the US-China Trade war,
affected the capability of Apple in outsourcing and offshoring their production lines to China
• The fading trade of the organization with China paved way to the growth of the Chinese
competitors of Apple like Huawei, Oppo and Xiaomi
• Apple’s minimization of trade relations with China also affected the rate of operations of
Foxconn technologies

Challenges
•Restricted trade with China due to the imposition of increased trade
tariffs
•Minimized market share in China
•Restricted the organization’s major production unit in partnership
with Foxconn

Opportunities
•Cheap labor in India
•Political stability and support

Problems
•Increased cost of training and development of the staff
•Initial costs for setting up infrastructural facilities

Conclusion
• Globalization largely supported the growth of the businesses through
increased scope of outsourcing and offshoring activities for improving
the rate of technological adaptations, building on networks and
collaboration among firms
• However, the shifts in the political situation, as per the case of Apple
and Foxconn, might also affect the rate of operations of the ventures

Recommendation
Collaborations with third party organizations
• Reduced costs of training
• Reduced rate of risks
• Reduced infrastructural and establishment costs for the organization