Outsourcing, Insourcing and Back-Sourcing, Research Paper Example

Outsourcing, Insourcing and Back-sourcing

Apple Inc. is one of the leading revenue generators from online shopping. The organization started with the mission “Change the world through technology”. Apple Inc. adopted a demarcation approach due to rapid change in the industry. Today apple’s goal is to deliver a high quality unique solution for the customer’s computing requirements. The product is for everyone because apple’s statement emphasize of dominance and innovativeness of the product. The customers pay extra for the unique experience they found in apple products. Apple Inc. is lead to the design, development, and marketing of computers and associated software, network solution, convenient digital music players etc. The organizations portfolio offers Mac computing systems, iPods, iPhones and servers. The software variety is Mac operating system, iLife, iWork and other Internet applications. The organization employs over 34,500 employees. During the end of September 2007 the recorded revenues were $24,006 million, increase of 24.3% over 2006. The revenue was increase due to increased sale of MAC systems and downloads of digital contents (DATAMONITOR: Apple computer, inc.2008).  Downloads of the digital contents were from Apple’s application digital store, earning a 30 million figure in just 60 days after launching.

The prime strategic factor when comparing outsourcing and insourcing is associated with achieving a competitive edge by executing an activity in house that will be the ultimate cost effective solution. Apple incorporated has also outsourced its major production processes to different regions around the planet, as China is one of the main facilitator in this sector.(Vikram, 1998) As Apple Inc. is not specialized in making computer chips and all associated computing devices, almost 70% of manufacturing processes of the company are outsourced. Instead of hiring organizational staff, Apple decided to outsource design functions to a third party. Similarly, printing functions and marketing functions to third parties as well. As a result, Apple was able to accomplish a $100 million image in the industry. Moreover, the prime focus for Apple was the in-house resources such as Apple DOS (Disk Operating System), supporting macro software etc. that made Apple products unique. (Crothers, 2012) As far as outsourcing is concerned, Apple has minimized is dependency on Samsung this is a chip making company. (Crothers, 2012) An analyst, Gus Richard said that “Apple is working with TSMC at 20 nanometers,”. Furthermore, one more chip industry confirms this information, as he says (Crothers, 2012) “The Apple-Samsung relationship has deteriorated to such a poor point that they’re just looking to fill contractual obligations, then make a change”. Apple Inc. that is the world’s biggest chip consumer currently has impacted one of the leading contract chip maker, Taiwan Semiconductor Manufacturing Company Limited. No one knew about the in sourcing strategy that made a technological shift by redesigning a 45 nanometer chip to 32 nanometer chip. The implementation of this strategy was gradual and today no one knows that the iPad is with 45-nanometer chip or 32 nanometer chip.

(Outsourcing still alive and well – rising costs of business are more powerful than ‘backshoring’ trned, n.d) Apart from outsourcing and insourcing, Apple Inc. has also downsized its customer service operations that were located overseas.  (Operations management2009) In the year 2006, Apple computers plugged on call centers in India, as they were too expensive. The primary reason to turn down this option is the impact associated with the business objectives for the company. Moreover, the economic forecast has also led the company to rethink the outsource policy associated with customer services.  However, the industry in the United States is planning to augment outsourcing customer services for various reasons i.e. shortage of skilled workers and rise in fuel prices in the country. At the same time, the cost for overseas labor is also rising; however, the developed countries will maintain labor prices competitive with the US market.

References

Crothers, B. (2012). Apple rethinking samsung chip partnership, say sources CNET News – Business Tech,

DATAMONITOR: Apple computer, inc. (2008). ().MarketLine, a Datamonitor business.

Vikram, S. (1998). Organizational transformation through business process reengineering: Applying lessons learned Pearson Education.

Outsourcing still alive and well – rising costs of business are more powerful than ‘backshoring’ trned, n.d Retrieved 10/14/2012, 2012, from http://www.newser.com/story/40634/outsourcing-still-alive-and-well.html

Operations management (2009). Pearson Education.