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Product cover image for Apple Inc.: Should It Diversify Its Supply Chain Outside Of China?

Apple Inc.: Should It Diversify Its Supply Chain Outside Of China?

Veena Keshav Pailwar

Product #:W31842
Supplier:Ivey
Discipline:Economics & Public Policy, Strategy
Setting:India, Taiwan, Vietnam, China, 2022
Details:Case (PDF) • 14 pages • 2023-08-14

Subjects:

MicroeconomicsCost analysisCostingEconomicsStrategy

Industries:

Fabrication and manufacturing

Geography:

AsiaIndiaVietnamChina
Your Price:$9.71

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In the quarter ending March 2022, Apple Inc. (Apple)’s share in the Chinese smartphone market fell to 17.9 per cent from 21.7 per cent in the previous quarter. Business analysts attributed the falling share to weak consumer sentiments; a lack of innovations; and major supply-side headwinds, including frequent COVID-related lockdowns in China, power shortages, Russia's invasion of Ukraine, and the trade and technology war between the United States and China. Apple needed to identify strategies to gain a leading share in the Chinese market. In the face of demand- and supply-side adversities in China, it also needed to reconsider its supply chain and manufacturing base. Should Apple keep its supply chain concentrated in China, to reap the benefits arising from the economies of scale in the production process? Or should it pursue geographic diversification for its supply chain, to protect itself from the major problems hovering on the horizon?

Learning Objectives

This case was developed for discussion in an undergraduate- or postgraduate-level management program. It is suitable for managerial economics courses comprising demand–supply analysis, market structure analysis, and exit decisions. The case can also be taken up in a business environment and strategy course to discuss strategic geographic expansion and contraction decisions in a dynamically changing business environment.

After working through the case and assignment questions, students will be able to do the following:
  • Understand the influence of demand and supply factors on a firm’s performance and market share.
  • Ascertain the market structure of a firm from quantitative and qualitative data.
  • Relate short-run and long-run cost analysis with managerial decisions.
  • Understand the importance of the business environment in strategic decisions of geographic relocation and diversification.
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Case Study: Apple Inc.: Should It Diversify Its Supply Chain Outside Of China? (English version) | Ivey Publishing