by e.r.w.i.n.
Could Foxconn’s Wage Rises be a Competitive Advantage For Apple?
[Via Forbes]
Now here’s something I hadn’t thought about: could the pressure on Apple, thus Foxconn, to raise manufacturing wages in China be utilised as a competitive advantage by Apple against competitors such as HP and Dell?
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Apple can do the right thing here and also be making good business decisions. It makes a very good profit on its devices, so it has a little money to put into the pot for the employees.
But its competitors make significantly less on their products. They have hardly any profit at all. So increased prices going to employees reduces those profits even more.
Apple’s innovative approach to supply has gotten itself here. It can build this devices at prices that the other companies can not compete against, making it almost impossible to create devices that make a profit.
So, Apple allows wages to rise, adding a few dollars to its costs, perhaps hurting its profits slightly, although this could increase sales from the goodwill it creates, as well as producing a lot of workers who may now be able to buy Apple’s products themselves. A possible win-win for everyone.
But other companies cannot do the same without devastating their bottom line. They are in a no win situation. If they keep wages low to keep their profits, they become persona non grata in the marketplace, as their potential customers turn away from them.
Or they raise wages and see their profits fall.
And who was responsible for getting Apple in this position making its assembly process so versatile and innovative that by raising wages they hurt their competitors? The current head – Tim Cook.
When this period of our history is written, Jobs will be a big part but the genius of Tim Cook will be seen as the truly amazing part he has been.
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