Why did Boeing decided to extensively outsource its production? What are the benefits to Boeing from outsourcing?
Boeing decided to outsource its production to maintain relations with foreign customers. Boeing realized that 80 percent of their customers were foreign airlines, and in order to nourish their business relationship they started outsourcing to those countries, with the hope that sales will remain stable or possibly increase. Moreover, they wanted suppliers who were the best in the world in a particular activity or component. Lastly, Boeing wanted to eliminate the costs of risks and costs associated with developing production facilities. Boeing benefits included lower costs in production, maintaining production facilities, strong business relationships with companies in other countries, less research for production since they had the best equipped suppliers and production experts. Furthermore, Boeing retained the engineering design, marketing…show more content… According to a report, employees were paid a minimum of $50 a month, force to work overtime, and the dormitories were in poor living conditions. As a result Apple audited the subcontractors operations, but appears as if they failed to communicate, and instead the managers at Hongfujin--the subcontracting company being audited, filed a defamation lawsuit against the journalists. In order to avoid ethical issues or mismanagement issues, Apple needs to enforce strict labor standards with its subcontractors, moreover, oversee production, working, and living conditions. Furthermore, the lawsuit appears to be an intimidation tactic, Hongfujin should have waited for Apple’s report to be completed and then plan an action to improve conditions for its employees then follow up with issuing a face-saving