Apple TNC case study:

Question 1

Apple location and background facts:

Answer 1

• Headquarters based in Cupertino, Northern California.
• European headquarters in Cork, Ireland
• Started business in 1976

Question 2

Apple’s success has been due to a number of factors:

Answer 2

• Well designed products
• Strong branding
• Innovative products
• Selling online

Question 3

Spatial organisation of Apple:

Answer 3

• Main products are designed in Silicon valley (technopole)
• Assembly of Apple’s main products is outsourced to Foxconn (in China)
• Apple’s European headquarters are in Cork, Ireland. Employs 4000 employees on its iMac production line.

Question 5

Production of Apple:

Answer 5

Mainstream products are produced in China because:

• Large source of highly skilled workers but low paid workers
• Good for China as it provides investment into the country and generates jobs.
• Shenzen (Foxconn are located here) is a SEZ offering a number of incentives to attract foreign countries

Question 6

What is Foxconn city ?

Answer 6

• A business park.
• Most workers live on the cite where there are domitories, shops and cafes.

Question 7

Apple’s impacts on Ireland:

Answer 7

It was lured to locate here due to the government’s 12.5% corporation tax, the second lowest in the EU.

Positives:
- Cork’s largest private employer
- Has attracted other high tech firms to the area
- Attracted a highly skilled workforce which has inspired for local research
- Enhanced Ireland’s reputation
- Multiplier effect

Negatives:
- Many of the highly skilled workers at Hollyhill are mainly from the EU, so Apple are accused of not creating sufficient work for local people.

• Counter to this is that it has helped Cork become a more diverse city

Question 8

Tax practices:

Answer 8

Apple have been accused of corporate tax avoidance.
Both USA and UK have claimed that Apple owed them tax on their profits, this shows a flaw in an increasingly globalised world

Question 9

Affects on China:

Answer 9

Labour practices:
- Reported workers were working more than 60 hour weeks for around $100 a month.

• Foxconn’s use of students and children is a part of it’s plan to maintain low cost and flexible workforce. Employees under 18 were subjected to the same working conditions as adults
• 2010, 14 suicides due to working conditions

Question 10

Environmental issues:

Answer 10

4 main reasons for being environmentally criticised by Greenpeace:

1) Reliance on non-renewable resources for electricity

2) Use of toxic chemicals in the manufacturing process

3) Factories in China were affecting local public health

4) Lack of recyclability of Apple products

Apple responded by launching it’s Green my Apple campaign:
-Now uses 75% renewable energy
- Removed chemicals from certain products
- Promoted recycling of their products

Moved up from 11th to 6th from 2006 to 2012 in the Green Electronic rankings