While Outsourcing Has Allowed Apple to Reap the Benefits of Lower

question 16

Multiple Choice

While outsourcing has allowed Apple to reap the benefits of lower cost and more flexible manufacturing, its lack of direct control has proven to be a challenge. How did Apple step in to improve working conditions at Foxconn, one of its major suppliers?

• A)Apple paid for the installation of suicide prevention nets below Foxconn's factory windows
• B)Apple discontinued its relationship with Foxconn in the best interests of Apple customers who were concerned over labor practices at the factories that manufacture the iPhone.
• C)Apple tightened its supplier standards and increased its efforts at monitoring conditions and enforcing its standards, such as over 700 comprehensive site audits each year to ensure compliance
• D)Apple used its immense sales volume and strong cash position and preferred treatment from suppliers as leverage to induce Foxconn to increase the salaries of the 1.3 million people on its payroll
• E)Apple discontinued all outsourcing activities in Asia and transferred the manufacture and production of its products to low wage countries in Latin America.

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Definitions:

Turnover

The rate at which inventory or assets of a business are replaced during a given period, often used as a measure of sales or operational efficiency.

Return on Investment

A financial metric used to calculate the profitability of an investment, measuring the gain or loss generated on an investment relative to the amount of money invested.

Investment Opportunity

A chance to use money with the expectation of achieving a return greater than the initial outlay.

Required Rate of Return

The minimum expected rate of return on an investment that makes it acceptable to an investor, based on the investment's risk level.