M1 Topic 4 Operations Strategies - Apple Case Study

Question 1

How is Quality used in Apple’s Operations strategies (4)

Answer 1

Sept 2013 CEO Tim Cook: “We have never been about selling the most.We’re about selling the best and having the best experience and happy customers

Apple struggling to complete this due to rising competition. (Apple turned market follower)

Question 2

How is Dependability used in Apple’s Operations strategies (2)

Answer 2

2017, Iphone X; release delayed due to issues with OLED display supplied by Samsung,

Shows challenges with supply chain management when relying on a single supplier. (effects dependability of product)

Question 3

How is Flexibility used in Apple’s Operations strategies (2)

Answer 3

• Apple claimed: “the smaller size of the iPhones was specifically designed for optimal usability
• 2016 iPhone 6, 6+: launch with larger screens due to the response to competitor phones like Samsung

Question 4

How is cost used in Apple’s Operations strategies (4)

Answer 4

• Outsourcing operations to Foxconn, low cost of labour
  and inputs
• Iphone 5c low cost model
• developing countries, India target with cheaper models, 5c and older models
• Establishing production facilities in India to avoid US tariffs on China

Question 5

How is research and development used in Apple’s Operations strategies (3)

Answer 5

Raise in R&D to combat rising competition and differentiate the iPhone:

• 2014 $6 bn US
• 2018 $14 bn Us

Question 6

How is Supply chain management used in Apple’s Operations strategies (4)

Answer 6

2015, apple has 785 suppliers, 31 countries, to ensure they have multiple suppliers for the same component to gain competitive advantage:

• secure exclusive supply
• reduce costs
• prevent delays in production

Question 7

How is Outsourcing used in Apple’s Operations strategies (2)

Answer 7

2016, 17th November, Australian Financial review: “Trump… promised to slap a tax on Chinese goods up to 45%… reinvigorate US manufacturing” = increase transport costs and product prices.

2017 18th May, The Time of India:
“Apple will begin full scale production of ‘Made in India’ iPhones in Bengaluru, as it awaits… clarity on the … GST Roll-out”

Question 8

How is Technology used in Apple’s Operations strategies

Answer 8

2016 Foxconn employees reduced: 110,000 to 50,000, introduction of robotics = considerable cost savings

Question 9

How is Global Sourcing used in Apple’s Operations strategies (4)

Answer 9

Battery: “Huapu Technology,” China
Camera: “Sony,” Japan
RAM: “Samsung” Korea
A9 processor: “Samsung” Korea

Question 10

How have quality controls used in Apples operations strategies

Answer 10

2012 Foxconn strike/riot: 2000 riot due to strict demand for quality controls without proper training

Apple unable to control quality due to outsourcing:
- 2013 Return of 5 million iPhones, to Foxconn= $1.6 bn in replacement cost