Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 2K views

    Apple Cost and Production

    Uploaded by

    Linh Nguyễn
    The document discusses the key inputs and costs of iPhone production. The three main inputs are components/materials, manufacturing costs, and research & development. Components/materials and manufacturing costs are variable costs that change with production amounts. Research & development is a fixed cost that does not change with production amounts. To reduce costs, Apple has diversified suppliers of components like chipsets and outsourced manufacturing to Foxconn. Investing heavily in research and development of the iOS operating system and hardware also helps Apple remain competitive.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Apple Cost and Production

    Uploaded by

    Linh Nguyễn
    2K views7 pages
    The document discusses the key inputs and costs of iPhone production. The three main inputs are components/materials, manufacturing costs, and research & development. Components/materials and manufacturing costs are variable costs that change with production amounts. Research & development is a fixed cost that does not change with production amounts. To reduce costs, Apple has diversified suppliers of components like chipsets and outsourced manufacturing to Foxconn. Investing heavily in research and development of the iOS operating system and hardware also helps Apple remain competitive.

    Original Description:

    microeconomic analysis

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the key inputs and costs of iPhone production. The three main inputs are components/materials, manufacturing costs, and research & development. Components/materials and manufacturing costs are variable costs that change with production amounts. Research & development is a fixed cost that does not change with production amounts. To reduce costs, Apple has diversified suppliers of components like chipsets and outsourced manufacturing to Foxconn. Investing heavily in research and development of the iOS operating system and hardware also helps Apple remain competitive.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views7 pages

    Apple Cost and Production

    Uploaded by

    Linh Nguyễn
    The document discusses the key inputs and costs of iPhone production. The three main inputs are components/materials, manufacturing costs, and research & development. Components/materials and manufacturing costs are variable costs that change with production amounts. Research & development is a fixed cost that does not change with production amounts. To reduce costs, Apple has diversified suppliers of components like chipsets and outsourced manufacturing to Foxconn. Investing heavily in research and development of the iOS operating system and hardware also helps Apple remain competitive.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 7

    1

    MBA 502 PART I MILESTONE TWO GUIDELINES AND RUBRIC


    PRODUCTION AND COST

    Lecturer: Greg Randolph


    Linh Nguyen
    1/25/2016

    I.

    THREE KEY INPUTS OF IPHONE PRODUCTION


    1/ COMPONENTS AND MATERIALS
    Components and materials used in the iPhone manufacturing process such as: touch
    screen, chipsets, camera, battery, etc. These components were bought from many
    suppliers such as Samsung, LG, Qualcomm, etc. These components materials used as
    ingredients in an iPhone are considered as variable costs because they vary directly with
    the number of iPhone that would be produced.

    Figure 1: Apple iPhone 6S Plus costs to make. (Chmielewski, 2015)

    2/ MANUFACTURING COST
    This cost was paid to contract manufacturer (Foxconn). Apple Inc. orders
    Foxconn to produce a number of iPhone under contract. For example: Apple has ordered
    80 million units of the iPhone 6 4.7 inch and the iPhone 6S 5.5 inch. Foxconn is
    expected to initially produce this number of product that have been ordered. (Alan, 2014)
    The cost based on the number of products which has been ordered is a specific numbers.
    However, the cost will increase if Apple Inc. wants to increase the number of products
    that they wish the manufacturing partners to produce or vice versa. This cost is
    considered as variable cost.
    3/ RESEARCH AND DEVELOPMENT
    According to its latest earnings report, Apple spent about $1.18 billion on
    Research and Development. (Sherman, 2013)). R&D (Research and Development)
    including iOS operating system and software, those were installed by default on the
    iPhone before the product is sold in the market. It also including researches about
    hardware such as screen, battery, camera, etc. Every iPhone is installed with same
    software. This means that Apple does not have to pay more or less for R&D cost in case
    they change the number of iPhones being produced. R&D costs is a fixed costs.
    II.

    ANALYSING THREE INPUTS OF IPHONE PRODUCTION


    1/ COMPONENT AND MATERIALS
    Over the years, Apple has pushed hard to decrease its reliance on third-party
    companies for its iPhone and iPad components. IPhone alone makes up about 60
    percent of the company's revenues. (Whittaker, 2015).Apples dependence on
    suppliers is making trouble to them when suppliers want to raise prices for their

    products. A typical example was in 2012, Samsung raised the price of iPhone chipset
    supplied to Apple by 20%. Initially, Apple has refused, but because they could not
    find alternative supplier, it should be accepted (the increase). Approving this contract
    means that iPhone production costs would increase and affect the amount of iPhone
    consumed. Besides getting more money from new contracts, Samsungs smartphone
    will have a good opportunity to compete with iPhone- costs rose due to higher
    production. This is absolutely not good for Apple and their products.
    2/ MANUFACTURING COST
    Foxconn is the manufacturing partner for the Apple iPhone. Cheap labor in China
    and not having invest in factories help Apple cut down iPhone production costs.
    3/ RESEARCH AND DEVELOPMENT
    IOS is the operating system of the iPhone's top strengths compared with its
    competitors. Besides the maximum support in the ecosystem that Apple has created
    for their products. The program also prioritizes applications written for the iPhone
    ahead of other operating systems.
    The top concern of customers about a new phone is the battery life. (Versace, 2013)
    This can be temporary resolved through updated OS versions. In a longer term, the
    solution is a new battery technology. Both methods require investment in R&D. what
    would happen if Apple introduce the next iPhone generation with a battery life of
    more than 2 or 3 times compare to competitors products? Perhaps Apple will usher in
    a new era as it unveiled the first generation iPhone in 2008. At the same time, it

    would be a bad ending to their competitors. However, the same thing will happen to
    Apple if its opponents can do that before them.
    III.

    DECISIONS
    1/ COMPONENT AND MATERIALS
    TSMC and Samsung are 2 suppliers who produce A9 chipset on iPhone 6s and 6s
    Plus. This means Samsung is no longer the sole manufacturer and Apple have
    alternatives choice if Samsung request to rise their chipset price. The competition
    between the two providers can also help to reduce the cost of the chipset or not
    increase unexpectedly.

    Figure 2: Apple A9 chipset suppliers. (Zafar, 2015)


    2/ MANUFACTURING COST
    Outsourcing iPhone is an extremely attractive work for companies worldwide.
    Therefore, Foxconn do not want to lose their contract to another company. Apple is such
    an important customer for Foxconn, that the company has its chairman, Terry Gou,

    overseeing production lines to make sure that everything is running smoothly.(Alan,


    2014)
    3/ RESEARCH AND DEVELOPMENT
    IV.

    Investing in R & D is a top priority in the iPhone production process.


    REFERRENCES

    Alan, F. (2014, July 28). Foxconn chairman Gou making sure production of Apple iPhone 6 goes
    smoothly. Retrieved January 25, 2016, from http://www.phonearena.com/news/Foxconnchairman-Gou-making-sure-production-of-Apple-iPhone-6-goes-smoothly_id58703
    Chmielewski, D. (2015, September 29). Apple's iPhone 6s Plus Costs an Estimated $236
    to Make -- $749 to Purchase. Retrieved January 25, 2016, from http://recode.net/
    2015/09/29/apples-iphone-6s-plus-costs-an-estimated-236-to-make-749-to-purchase/
    Sherman, J. (2013, July 26). Spendy but indispensable: Breaking down the full $650 cost of the
    iPhone 5. Retrieved January 25, 2016, from http://www.digitaltrends.com/mobile/iphonecost-what-apple-is-paying/
    Versace, C. (2013, August 28). What Do Consumers Want In A New Smartphone? Retrieved
    January 25, 2016, from http://www.forbes.com/sites/chrisversace/2013/08/21/what-doconsumers-want-in-a-new-smartphone/#7608a05947b3
    Whittaker, Z. (2015, January 26). Apple to rely on Samsung chips for iPhone, iPad into 2015 |
    ZDNet. Retrieved January 25, 2016, from http://www.zdnet.com/article/apple-stilldepending-on-samsung-for-iphone-chips-as/
    Zafar, R. (2015, September 02). Apple A9 Percentages Show TSMC Getting Majority Of iPhone
    6s Share. Retrieved January 25, 2016, from http://wccftech.com/iphone-6s6s-tsmcsamsung-percentages/

    You might also like