Summer 2020

Strategic Management
Course Code: MGT489
Section: 6

Group Project # Foxconn

Submitted To: Submitted by:

Group name: Innovation Geeks
Samuel Mursalin (SMM4) Khadim Sirajus Salekin 1430532630
Samia Islam 1431032630
.Kaniz Farjana 1512168030
Md. Ariful Enam 1610574030
Tasin Ibna Jahur Chowdhury 1611476020
Imrul Farhan Pritom 1620326030
Nafis Faisal Choudhury 1632855030
Abdullah Al Mamun 1731147030
Lecturer
Department of Management
North South University

Submitted on: 30th September 2020

Table of Contents
Company Overview of Foxconn......................................................................................................2

Business Lines of Foxconn..............................................................................................................3

SWOT Analysis of Foxconn............................................................................................................4

Foxconn’s Competitor’s Analysis...................................................................................................6

Foxconn’s Corporate-Level Strategies..........................................................................................15

Foxconn’s Business Level Strategies............................................................................................17

Foxconn’s Functional Level Strategies.........................................................................................18

Recommendation...........................................................................................................................20

References......................................................................................................................................21

Company Overview of Foxconn

Foxconn is also known as Hon Hai Precision Industry Co., Ltd, Foxconn Electronics Inc.
In 1974, Foxconn was established by Terry Gou. Foxconn is also the leading technology solution
provider and it continuously leverages its expertise in software and hardware to integrate its
unique manufacturing systems with emerging technologies. By capitalizing on its expertise in
1
Cloud Computing, Mobile Devices, IoT, Big Data, AI, Smart Networks, and Robotics /
Automation, the Group has expanded not only its capabilities into the development of electric
vehicles, digital health and robotics, but also three key technologies –AI, semiconductors and
new-generation communications technology – which are key to driving its long-term growth
strategy and the four core product pillars: Consumer Products, Enterprise Products, Computing
Products and Components and Others. As of now, Foxconn enlists around 1,000,000 workers to
serve the company. The organization is centred on the development and has improved its
incomes from the most recent few years. [ CITATION hon \l 1033 ]

The company has established R&D and manufacturing centres in other markets around
the world that include China, India, Japan, Vietnam, Malaysia, Czech Republic, U.S. and more.
With a focus on research and development, the company owns more than 83,500 patents. In
addition to maximizing value creation for customers who include many of the world’s leading
technology companies, Foxconn is also dedicated to championing environmental sustainability in
the manufacturing process and serving as a best-practices model for global enterprises.
[ CITATION hon \l 1033 ] Last few years, Foxconn revenue has increased steadily. The demand
for Electronics, Hardware, and Information Technology, Software are very high that’s why they
can capture the whole market by their best services. In 2019, Foxconn achieved NT$5.34 trillion
in revenue. The company has received widespread international accolades and recognition since
its establishment. In 2019, the company ranked 23rd on the Fortune Global 500 rankings, 25th in
the Top 100 Digital Companies, and 143rd in the Forbes ranking of the World’s Best Employers.
[ CITATION hon \l 1033 ]

Mission: To ensure all employees to take active roles in meeting the company’s global
targets, by decomposing them into departmentally distributed realistic targets.[ CITATION
com \l 1033 ]

To ensure a reliable organization and discipline where all employees will be glad to be a
part.

To act continuously on increasing the turnover by considering the principle of “Win-

Win”.

To ensure the use of all resources effectively and efficiently.[ CITATION com \l 1033 ]

2
 To create a clean, healthy and safe production and work environment which respects
human and considers the next generations.

Vision: Foxconn s vision has always been to provide technological products and
solutions that bring convenience to people s everyday lives.[ CITATION com \l 1033 ]

Business Lines of Foxconn

Foxconn is a multinational electronics manufacturer operating its business in different
countries over the world. In mainland China, Foxconn had 12 factories in nine cities. Their first
milestone when intel selected them to manufacture motherboards instead of Asus. The expansion
was further pursued when the acquisition of 10 per cent stake of Japanese company sharp
corporation and purchased up to 50 per cent of LCD produced at sharps plant.

Foxconn diverse their business in the last two decades significantly, their business line
has expanded by rapid acquisition of renowned companies and working with them.

In India, their investment in Snapdeal and manufacturing product for Gionee are
examples of business line expansion

Sony's PlayStation 3, the Nintendo Wii and Amazon's Kindle Fire are just a few of the
products Foxconn makes. It also produces TVs for Sony, Sharp, and Toshiba, handsets for
Nokia, Motorola and Huawei, and networking equipment for Cisco, according to Arthur Liao, an
analyst with Fubon Securities Investment Services Co. Kan, M. (2020, December 24). Foxconn
builds products for many vendors, but its mud sticks to Apple. Retrieved September 28, 2020,
from https://www.macworld.com/article/2012972/foxconn-builds-products-for-many-vendors-
but-its-mud-sticks-to-apple.html

Foxconn is also a major assembler of PCs for Hewlett-Packard, Dell, and Acer, and
manufactures all three of the big game consoles, from Microsoft, Nintendo and Sony, other
analysts said.

3
 Cisco, Huawei, Nintendo, Sony, and Nokia all confirmed they use Foxconn as a
manufacturer, though Nokia said the "clear majority" of its phones are made in-house. Other
firms including Acer, Microsoft, Motorola, Sharp and Toshiba declined to comment about where

their products are made.

Subsidiaries of Foxconn

These are the subsidiaries of Foxconn. They have jacked with many companies and parallelly
acquired many of them. Foxconn work as a component supplier to many OEMs. They focus on
mass production of specific parts used in electronics products. Foxconn also acts as a contract
manufacturer for companies such as Apple. This allows Apple to utilize Foxconn’s large
production facilities and low-cost facilities to mass-produce their products.

SWOT Analysis of Foxconn

Strengths:

 Even if one of Foxconn’s product loses market share their diverse product range enables
them to survive.

 Foxconn is the leading company in terms of patents and productivity as they are the
manufacturers of almost all of the prevalent electronics. Example: iPhone, iPad, Kindle,
PlayStation, etc.

4
  Foxconn has the shortest supply chain due to their vastly varied production scale and
vertically integrated business model.

 Factories spread around the world.

Weakness:

 Compared to other bigger players Foxconn have a limited designing skillset.

 Easily replicable business model. Their number of patents and property rights may help
in thwarting competition of the same size but it is difficult to stop startups entering with
disruptive innovations.

 Foxconn has a limited global presence and market share.

 Lack of workforce diversity because most of Foxconn's growth is in the domestic

market.

Opportunities:

 Focus on increasing the sales of next-gen technology electronics.

 Globalization has greatly reduced the risks of market penetration and marketing in
foreign markets, along with the increase in digital marketing and social media.

 Major brands looking to outsource manufacturing to achieve economies of scale.

Threats:

 Reducing costs of and increasing efficiency of reaching customers through social media
platforms and e-commerce have increased the threat of new entrants.

 The emergence of new markets has increased competition from competitors such as
Pegatron Corp, Flextronics and Sanmina SCI.

 Downward pressure on prices due to the increased bargaining power of customers.

5
 Supply chain & production disruptions caused by COVID-19 impacting profits
negatively

Foxconn’s Competitor’s Analysis

Foxconn technology group is a trading company of Hon Hai Precision Industry Company Ltd.
Which headquarters is in Taiwan, China. This is an electronics manufacturing company. Around
the world it has so many competitors to be mentioned.

Generally, Foxconn’s competitors are divided into three types: [[ CITATION Fox201 \l 2057 ]]
[[ CITATION SWO19 \l 2057 ]]

● Direct competitor: Asus, Jabil, Celestica, Elite group, MSI Computer, Sanmina,
Wistronare Pegatron, Compal.

● Secondary or indirect competitor: Pudu, Autonomous.

● Substitute competition: Goertek, Luxshare [[ CITATION 9Ma20 \l 2057 ]]

2. Information about main competitors

Technology is developing day to day and Foxconn is not the only one in this market. So, it is
important to collect information about the main competitors. Which helps to survive in the
market for the long run. As the main competitor of Foxconn, we will discuss Jabil And Celestica.

● Products and services:

Jabil Inc. is an American manufacturer of facilities worldwide. Headquartered in Gateway, St.

Petersburg, Florida, it is one of the biggest businesses in the Tampa Bay area. Jabil has 100
plants in 28 cities, and 170,000 workers worldwide. Jabil Inc. offers facilities and products for
computer engineering. The operational division of the business comprises Electronics
Manufacturing Services (EMS) and Diversified Manufacturing Services (DMS). The EMS
section focuses on information management, supply chain planning and manufacturing,
fundamental electronics innovations. The DMS section focuses on the provision of technical
technologies and the emphasis on material sciences and manufacturing. It offers electronic
architecture, manufacturing and product management services for automobile, capital machinery,

6
consumer lifestyles and wearable devices, computing and storage, defence and aerospace, digital
home, emerging growth, healthcare, industrial and energy, connectivity, packaging, retail and
printing industries. Jabil Inc., formerly known as Jabil Circuit Inc., is located in FL, USA.

Celestica Inc. is a Canadian international electronics engineering services corporation located in

Toronto, Ontario. Celestica Inc. is a producer of supply chain strategies. The firm works in the
industry sector of electronics production facilities. The Company provides a variety of services
to its clients, including design and development, technical consulting, supply chain management,
new product launch, component procurement, electronics production, assembly and testing,
complex mechanical assembly, machine integration, precision machining, order delivery,
distribution and after-sales maintenance and returns services. Its products and services support a
wide variety of uses, including servers; retrieval systems; optical devices; aerospace and defence
electronics; healthcare products and software; semiconductor devices and several commercial
and renewable energy devices, including solar panels and inverters. It designs, produces and tests
solar panels for personal, industrial and utility industry applications. It uses technology for the
assembly and examination of its products.

● Pricing: The annual sales growth of Jabil continued for the fifth year in 2019 (end of
August) with a 14 per cent increase from 2018.

The corporation posted revenue of $25.3 billion in 2019, up to $3.2 billion in 2018. This was
largely attributed to a rise of 26% in the EMS category.

Net profits attributable to Jabil amounted to $287.1 million in 2019, up 233 per cent from $86.3
million in 2018.

Jabil had around $1.2 billion in currency and cash equivalents in 2019, similar to $1.3 billion in
2018. Operations provided around $1.2 billion in cash in 2019, while acquisition and finance
operations used $872.5 million and $415.8 million respectively.

Strategy Supported by Jabil includes: Creating and Retaining Long-Term Client Partnerships,
Product Diversification, Client-Center Business Divisions Usage, Multinational Production
Leveraging, Equipment Assembly Offering, Direct-Order Delivery and Configure-to-Order
Services, Design Services Offering. [[ CITATION Jab19 \l 2057 ]]

7
Celestica: [[ CITATION Cel20 \l 2057 ]]

● Revenue: $1.49 billion, rose by 3% compared to $1.45 billion for the second
quarter of 2019 (Q2 2019), which was better than anticipated.

● Operating margin (non-IFRS) : 3.4% compared to 2.5% for Q2 2019.

● Advanced Technology Solutions (ATS) revenue segment: declined by 11 per cent

relative to Q2 2019 and accounted for 34 per cent of total revenue compared to 39
per cent of total revenue for Q2 2019; ATS segment margin was 3.1 per cent
compared to 2.8 per cent for Q2 2019.

● Connectivity & Cloud Solutions (CCS) revenue segment: rose by 12 per cent
compared to Q2 2019 and accounted for 66 per cent of total revenue compared to
61 per cent of total revenue for Q2 2019; CCS segment margin was 3.6 per cent
compared to 2.4 per cent for Q2 2019.

● IFRS earnings per share (EPS): $0.10 per share compared to $0.05 per share for
Q2 2019.

● Modified EPS (non-IFRS): $0.25 per share, compared to $0.12 per share in Q2
2019.

● Modified return on investment capital (non-IFRS) : 12.9% compared to 8.4% for

Q2 2019.

● Free cash flow (non-IFRS): $37.9 million compared to $46.5 million in Q2 2019.

● Repaid $61.0 million in unpaid debt on a revolving basis.

● The global network runs at about 95 per cent of the usual workforce.

● The $450 million revolvers of Undrawn.

● About $435 million in currency equivalents.

8
 ● Positioning and branding:

Alongside global brands such as Intel in the Semiconductor sector, Jabil has shown its
contribution to quality growth by climbing to # 6 in the sector this year, up from # 8 last year,
Top 100 Technology Firms 2018, America's Largest Public Firms 2018, Best Multinational
Performers 2017.

As Jabil completes another year of business, the creative nature of the industry permeates today's
society and pushes us to deliver groundbreaking goods to the market easily, efficiently and safely
with some of the world's most renowned brands. [[ CITATION Jab17 \l 2057 ]]

Starting as a division of IBM-Canada, Celestica has historically focused on telecommunications

technologies and products patented by outside firms. However, Celestica has recently revised its
approach by outsourcing typical activities and concentrating its domestic resources on product
growth in emerging markets. In September 2012, Celestica acquired D&H Manufacturing Firm,
a key provider of precision machined/manufactured parts and assemblies for the semiconductor
capital equipment industry, just months after an agreement to cut ties with BlackBerry. Both
changes underscored Celestica's strategy transition, and the business aims to aim at diversified
markets — medical and aerospace, in particular — to fill the gap created by BlackBerry.
[[ CITATION Mar13 \l 2057 ]]

● Market reputation: Both Jabil and Celestica are known for their support on the market.
For the second year in a row, Jabil has been named to the 2017 Fortune World's Most
Admired Companies list.

● Jabil has come a long way in the last five decades. From the days of the development and
repair of circuit boards in Detroit, Michigan, to the competitive Fortune 200 product
solutions pioneer with 101 plants in 28 countries, Jabil has always had innovation rooted
in its history. [[ CITATION Jab17 \l 2057 ]]

Celestica's credibility and cumulative excellence have been achieved through years of trial, error
and strong collaboration with big corporations such as Honeywell Inc., Raytheon Co., Boeing
Co. and Airbus SAS. Like Sanmina, Celestica's industry depends on selective, exclusive
arrangements for comparatively few clients. In 2013, the top 10 clients of the company

9
accounted for 65 per cent of the company's gross sales, with Cisco Systems Inc. accounting for
more than 10 per cent of the total. [[ CITATION Mar13 \l 2057 ]]

3. Analyze the competitor’s strengths and weaknesses

Strength of Jabil:

● Superb Emerging Company Results – Jabil Circuit, Inc. has developed experience in
entering and making new markets a success. The expansion has allowed the company to
develop new business sources and diversify the danger of the economic downturn in the
countries in which it works.

● Good Free Cash Flow – Jabil Circuit, Inc. provides large free cash flows that provide the
business with money to grow into new ventures.

● Extremely competitive Go To Market plan for the goods.

● Solid dealer network – A culture has been established between dealers and distributors,
where dealers not only advertise company goods but also engage in educating the sales
team to demonstrate to the consumer how they can derive the full value from the goods.

● Broad Brand Portfolio – Over the years, Jabil Circuit, Inc. has invested in developing a
large portfolio of labels. The SWOT review of Jabil Circuit, Inc. underlines this fact. This
portfolio of products can be incredibly valuable if the company needs to expand into new
product categories.

● Solid Delivery Network – Over the years, Jabil Circuit, Inc. has developed a stable
distribution network that can meet much of its potential market.

● Reliable suppliers – It has a deep foundation of reliable raw material manufacturers,

allowing the business to solve any supply chain bottlenecks.

● Effective track record of incorporation of comparable companies by mergers and

acquisitions. Over the last few years, it has effectively incorporated a range of technology
providers to streamline its processes and create a stable supply chain.

10
 ● The organization has not been able to face the demands of new competitors in the sector
and has lost a limited market share in niche categories. Jabil Circuit, Inc. must develop an
internal engagement system directly from the sales team on the ground to overcome these
obstacles.

The weakness of Jabil: [[CITATION Jab \l 2057 ]]

● The organizational layout is only consistent with the existing business model, thereby
reducing the growth of neighbouring product divisions.

● Investment in research and development is behind the fastest-growing participants in the

market. While Jabil Circuit, Inc. invests more than the industry average on research and
development, it has not been able to compete with the industry's leading players in terms
of innovation. It has come off as a seasoned business looking forward to delivering
products focused on tested technology to the market.

● More investment in emerging technology is required. With the scope of growth and the
diverse geographies that the organization aims to grow into, Jabil Circuit, Inc. requires to
spend more resources in technologies and automate processes around the board.
Investment in innovations is not at the same period as the company's goal at the moment.

● Not so good at merging businesses into a diverse work culture. As stated earlier, even
though Jabil Circuit, Inc. is effective in merging small businesses, it has its share of
failure to integrate organizations with the different work culture.

● The promotion of goods has left a lot to be desired. While the product is a success in
terms of sales, its positioning and specific selling proposal are not well established, which
can lead to attacks by rivals in this market.

● There are differences in the selection of goods offered by the firm. This lack of
preference will give a new competitor a foothold in the market.

Strength Of Celestica: [[ CITATION Cel201 \l 2057 ]]

11
 ● Automation of operations added stability in quality to the goods in Celestica Inc. which
made it possible for the company to scale up which scale down based on consumer
demand conditions.

● Good Free Cash Flow – Celestica Inc. provides large free cash flows that provide the
business with money to grow into new ventures.

● Solid dealer network – A culture has been established between dealers and distributors,
where dealers not only advertise company goods but also engage in educating the sales
team to demonstrate to the consumer how they can derive the full value from the goods.

● A good track record for the production of innovative technologies – product growth.

● Effective track record of incorporation of comparable companies by mergers and

acquisitions. Over the last few years, it has effectively incorporated a range of technology
providers to streamline its processes and create a stable supply chain.

● Reliable suppliers – It has a deep foundation of reliable raw material manufacturers,

allowing the business to solve any supply chain bottlenecks.

● Strong returns on capital expenditure – Celestica Inc. has been reasonably successful in
introducing new ventures and has produced reasonable returns on capital expenditure
through the creation of new revenue sources.

● Broad Brand Collection – Over the years, Celestica Inc. has invested in developing a
broad range of labels. The SWOT review of Celestica Inc. underlines this fact. This
portfolio of products will be incredibly helpful if the company wishes to extend into new
product categories.

The weakness of Celestica:

● A high rate of turnover in the workforce – compared to most companies in the Celestica
Inc. sector, it has a higher incidence of turnover and would expend far more than its rivals
on the recruitment and growth of its workers.

12
 ● The organizational layout is only consistent with the existing business model, thereby
reducing the growth of neighbouring product divisions.

● Investment in research and development is behind the fastest-growing participants in the

market. While Celestica Inc. spends more than the industry average on research and
growth, it has not been able to compete with the industry's leading players in terms of
innovation. It has come off as a seasoned business looking forward to delivering products
focused on tested technology to the market.

● Restricted success outside the core market – While Celestica Inc. is one of the leading
companies in its industry, it has encountered difficulties in expanding to other product
categories in its existing culture.

● The profitability ratio and net contribution rate of Celestica Inc. are below the industry
average.

● Financial analysis is not carried out correctly and effectively. Current asset ratios and
liquid asset ratios indicate that the business can make more effective use of capital than it
does at present.

● More investment in emerging technology is required. With the size of growth and the
diverse geographies that the organization aims to grow into, Celestica Inc. requires to
spend more resources in technologies and automate processes around the board.
Investment in innovations is not at the same period as the company's goal at the moment.

4. Competitive advantage [[ CITATION Cel201 \l 2057 ]]

Opportunities are macro-environmental trends and innovations that Foxconn's Foxconn can
exploit either to consolidate or further extend the current business share. Opportunities can
emerge from different causes, such as political trends and regulatory changes, economic growth,
increased consumer disposable incomes, changes in market tastes and technological advances.

13
-Increase in consumer disposable income – Foxconn will use growing disposable income to
create a modern market model where consumers start paying increasingly for the use of their
goods. According to Robert G. Eccles, George Serafeim, Beiting Cheng of the Foxconn
Technology Community (A) case study, Foxconn's Foxconn will use this development to grow
in adjacent areas Ethics, Capital Markets, Human Resources Management, Leadership,
Empowering Employees, Social Entrepreneurship, Corporate Justice, Supply Chain,
Sustainability.

-Increased standardization – Foxconn can leverage this trend to reduce the number of offerings in
the market and focus the marketing efforts on only the most successful products.

-Opportunities in Neighboring Markets – Foxconn's will investigate neighbouring sectors Ethics,

Capital Markets, Human Resources Management, Leadership, Inspiring People, Social
Entrepreneurship, Social Accountability, Supply Chain, Competitiveness to accelerate business
expansion, in particular by widening the functionality of existing goods and services.

-Building prospects in foreign markets – Globalization has given rise to openings in the
international market. Foxconn's Foxconn is in a prime position to tap into these opportunities and
boost market share. According to Robert G. Eccles, George Serafeim, Beiting Cheng,
development in the foreign sector will also help Foxconn diversify the risk as it would be less
reliant on the domestic sales market.

- Reducing the Expense of Brand Penetration and Brand in Foreign Markets – According to
Robert G. Eccles, George Serafeim, Beiting Cheng, globalization and the increase of internet
marketing and social media have greatly reduced the costs of business penetration and marketing
of international markets.

-Increasing Industry Share and Changing Customer Tastes – Over the past decade and a half,
business growth has increased at a steady rate. The influx of new consumers has also contributed
to a change in market habits and tastes. Foxconn's Foxconn faces two huge challenges – how to
keep existing clients and how to appeal to potential consumers. Foxconn's Foxconn sought to

14
diversify first by using various brands and then by incorporating various features depending on
consumer tastes.

Foxconn’s Corporate-Level Strategies

The corporate-level strategies of a business focus on the nature of the business in a particular
industry. The goal of these strategies is to promote the success of business-level strategies. The
key business-level strategy of Foxconn is Broad Differentiation, where they produce innovative,
functional, and unique products to position themselves differently than rival companies in the
market. To promote the success of this strategy, Foxconn follows 3 corporate-level strategies that
allow the company to consolidate themselves within the industry. The 3 corporate-level
strategies that Foxconn follows are:

I. Vertical integration
II. Concentric diversification
III. Internalization

1. Vertical Integration

The main concept of vertical integration is coming together of two different companies that are
at different levels of a value chain. Foxconn exercises the backward vertical integration strategy,
where the company produces inputs for Apple Inc.

According to TrendForce, 2016, the main strength of Foxconn is integrating with matured
industries, which is why on February 25, 2016, Foxconn completed the acquisition of the

15
electronics brand Sharp. The company decided to expand in a time when the global demand for
electronics had been on the fall. However, according to WitsView, a sector of TrendForce, the
alliance with Sharp was forecasted to be an advantage in vertical integration with Foxconn
producing high-quality, and mid and low range products for the US as well as worldwide
customers (TrendForce, 2016).

Apple has been a flagbearer of vertical integration for over 35 years now. This has helped Apple
to specialize everything under one roof (David Hsu, Knowledge@Wharton, 2012). However,
such a strategy has taken Apple years after years to find success. One of the key features of
Apple and any other company under Apple has been the strategy to integrate with established
businesses. Foxconn coordinates with alliance and acquisitions by never focusing on desperate
industries, rather moving up the value chain through vertical integration with upstream
industries.

2. Concentric Diversification

The second key strategy Foxconn undertakes throughout the corporate level is diversification.
With the rising labour cost and the shallow trend towards high-end products have led Foxconn to
diversify in different areas, from electric cars to robots (Mundy. S, and Inagaki. K, 2016). The
Taiwanese company concentrates on related diversification, where it keeps all its products under
the electronics umbrella.

The acquisition of Sharp has paved way for diversification for Foxconn. According to an analyst
at Ace Research Institute, Hideki Yasuda, the acquisition would be helpful for Foxconn as it will
allow the company to expand globally with a diverse range of offerings in an attempt to move up
the value chain (Mundy. S, and Inagaki. K, 2016). Moreover, when Foxconn decided to go for a
joint venture with HP in 2014, the aim was to provide cloud computing services, and later when
Foxconn decided to expand through opening a chain of healthcare resorts in Asia, prove how
concentric diversification has been a crucial aspect of climbing up the ladder of the value chain
(Riley. J, 2014). The company has always been moving towards different electronic sectors, like
electronic vehicles, manufacturing a factory of a car battery in China, and agreeing to sign for
co-operation with Tencent, a Chinese technology group (Mundy. S, and Inagaki. K, 2016).

16
3. Internalization

Like other technology-based companies practising related diversification, Foxconn follows

internalization to focus on the company’s internal management system and practices across the
different country (Morgan, Kristensen and Whitley, 2001). The company has been achieving
high-quality with low-cost products over the years, with over 30,000 employees living in
residences run by Foxconn that have numerous services for the workers (Duhigg, and Bradsher,
2012). Foxconn follows such highly culture-specific workforce across different countries and
especially in the home country (Narula, et.al., 2019).

Foxconn’s Business Level Strategies

The business-level strategy that the multinational electronics company implements are Broad
differentiation strategy in their product offerings. They differentiate themselves from rivals
through their brand positioning by offering them products that are of high quality. These
products they offer are innovative, functional and have a unique elegant design that gives
Foxconn a competitive edge for rivals and makes it preferred by the top brands like, HP, Dell
and Apple. Foxconn Technology Group generated revenues of about 178 billion U.S. dollars, an
increase from the 173 billion U.S dollars in revenue that the company recorded in 2018(Alsop. T,
2020). Foxconn generates its revenue from generating hardware, PC and products for apple pc
and smartphones. Foxconn holds a price premium over its competitors Celestica and TDK.
Foxconn chargers a price premium on its products, which increases Foxconn’s brand value, the
price premium shows the products to be of higher premium quality compared to rivals. Dell and
Apple are getting the best materials for the products, which increased the popularity and demand
for them (Alsop. T, 2020).

Broad Low-cost strategy: Foxconn to lower its cost yet still maintain a price premium and
make a profit. Decided to invest in Factories in India, China and Brazil (Choudhury. R,2020).

17
Where workers are highly skilled and competent to produce with efficiency. This helps maintain
profit and create products at the lowest possible cost, as the labour cost is low in these places that
Foxconn decided to set up factories in.

Generic Business level strategy:

Rivalry: Competitors of Foxconn engage in rivalry by reducing their prices in the market. The
reason why rivalry at this level is growing because the market in this industry is starting to
become more and more saturated. The reason Foxconn stands out is because of their
performance. Their low labour cost and flourishing demand is the cause for them to get the most
market share in comparison to rivals such as Celestica and TDK ( Choudhury. R, 2020).

The threat of new entrants entering the market is high, but the new entrants are failing to
compete as Foxconn has taken over all the important brands like Apple and made their mark.
Customers are also receptive to the devices created by Foxconn, as they know Foxconn is the
most reputed brand that offers the best quality

Foxconn’s Functional Level Strategies

Superior Efficiency:

Foxconn is achieving economies of scale by making its workers experience to do the particular
tasks repeatedly in short cycle time. So, Foxconn is using experience effect to move to
economies of scale. Foxconn has long assembly lines. It uses a traditional assembly line that
means in one assembly line, it offers 1 product. Foxconn position itself as a low cost but high in
quality contract manufacturer in the industry. Foxconn’s ultimate marketing strategy in which
they rely on is not to compete with their customers that results in creating a difference between
Foxconn & another contract manufacturer in the market. The company’s trustworthy
characteristic makes its’ customers heavily dependent on them & thus Foxconn saves money
from running any kind of promotional campaigns (The Foxconn Factory Video Tour)

18
Foxconn uses JDM (Joint Design Manufacturing) method while doing product designing (Hans
Wu, Jessie Shen, 2009) and the company is using one-stop shop service for its distribution
process that covers manufacturing, logistic and reselling (Apostolou, 2012).

Foxconn’s customer retention is very high since it gains the trust of the existing customers also
provides high-quality products in the lowest possible price. Foxconn’s expansion in Europe,
Asia, North America gives the company exposure to attract new customers.

Foxconn’s supply chain management is designed to cope up with the customer needs. In Asia,
their supply chain management is not up-to-date with the technological changes. But in Europe,
their automated supply chain management gives them the flexibility to keep low cost, achieve
production within a short period (SUPPLY CHAIN SOLUTIONS).

Superior quality:

Attaining Reliability: Foxconn is one of the 500 fortune companies which is using total quality
management to provide ‘Six Sigma’ (black belts) to its employees & the company tracks down
the production improvement. (6 Sigma Black Belt Program For Global OEM Leader)

Attaining Excellence: Foxconn understands that its’ market segments are mainly big brands. So,
it positions itself using the cost leadership strategy & also gaining the trust of not being rival of
the customers. Because of the dispute between China & USA, Foxconn faced problems &
pressures from the customers, especially from Apple. The marketing research team identifies that
Apple wants to source the materials more from US manufacturers. So, the R&D team conveyed
the message to the marketing team that to give exposure of Foxconn’s new expansion in the USA
in their marketing communication & marketing team worked according to that to showcase
company’s goodwill appearance to its biggest customer, Apple. (Sarah Mishkin, Samantha,
2013)

Superior innovation:

19
Foxconn focused on creating robots to automate their process in production. They planned to
install 1 million robots to automate the factories. Also, they have come up with the new product
‘Display’ as they find it as a new business opportunity to expand its customer base. Now, they
are producing display for Xiaomi, Tesla Inc., One Plus, Nokia (for tablets). Foxconn has also
entered the markets of fibre-based internet service, solar energy, cloud computing. These give a
boost to increase their profitability. (Liemt)

Superior Customer Responsiveness:

Foxconn’s flexibility to the customer choices of changing volumes, also the consideration of
taking any product related problem seriously & back to the customers with its’ swift customer
support boost them to achieve superior customer responsiveness. (The Foxconn Factory Video
Tour)

Recommendation
Foxconn makes over 40 per cent of the world's electronics products with 1.3 million workers. So
it's needless to mention they're how massive they're as a corporation and the way big their impact
is on the economy and people’s lives as they're the employers of many people. By analyzing the
report and gathering information from the web there are few recommendations which will be
made for this colossal company. Foxconn should improve its technology and digital field
continuously. They can develop Artificial Intelligence better customer demand. Foxconn also
needs to create a value proportion for the new target customer. The primary and most vital one is
improving their treatment policy towards their employees, specifically labours. This treatment
consists of several fields which may be a safe and healthy work environment, maintaining proper
psychological state for the workers. In May 2011 few workers were killed and injured because of
an explosion within the workshop of a factory in Chengdu owned by a supplier to Apple and
other electronic companies. These sort issues got to be addressed at the utmost level of priority
and therefore the company should be mapped out and take necessary steps to stop these
workplace hazards. If anything happens of this type there must be precautions to minimize the
damage. Another shocking but true fact about Foxconn is there are several reports of the suicide
of employees of the corporate, especially among low paid labours. One more reason is extremely
high work hours per week but criminally low payment for per hour work. For a corporation of

20
this enormous size and reputation, these incidents are just not acceptable. The authority must
take steps to enhance things to make sure the healthy physical and mental condition of each
employee. That would be done by counselling, recreational tours, regular vacations, open
workspace and lots of more ways in which uplifts the labourer's psychological state. Maximum
work hours and overtime should be reduced to the quality work hours that are followed in
developed countries. To alleviate the psychological burden on them, businesses got to take
flexible steps concerned with the psychological feelings and wishes of workers, under the burden
of a highly competitive company. So they should improve their performance in this area and
concern about health and safety issues. They need to train their workers frequently. Their chain
of command should be strong. The employee should get proper training. Not only employees
should train properly to avoid this kind of incident and more productive results. Their chain of
command should be strong. Their employee’s performance should be strong. They also maintain
the feedback loop between top-level management and functional level management. It will help
them to make the best solution to make a major decision. Foxconn should improve human
resource management so that they can avoid any kind of problem.

References

1. Choudhury, R (2020) Apple supplier Foxconn is ahead of its peers in diversifying out of
China, analyst says Retrieved from https://www.cnbc.com/2020/08/14/apple-supplier-
foxconn-ahead-of-competitors-in-diversifying-out-of-china.html

2. Alsop, T (2020), Foxconn Technology Group: global revenue 2005-2019 Retrieved from
https://www.statista.com/statistics/277582/revenue-of-foxconn-electronics-since-2005/

3. Duhigg, C., & Bradsher, K. 2012. How the U.S. lost out on iPhone work. New York
Times, January 22. https://www.nytimes.com/2012/01/22/business/apple-america-and-a-
squeezed-middleclass.html.

21
4. Narula, R., Asmussen, C.G., Chi, T. et al. Applying and advancing internalization theory:
The multinational enterprise in the twenty-first century. J Int Bus Stud 50, 1231–1252
(2019). https://doi.org/10.1057/s41267-019-00260-6
5. Knowledge@Wharton: Vertical Integration Works for Apple — But It Won’t for
Everyone. (2012, May 14). Retrieved from
https://knowledge.wharton.upenn.edu/article/vertical-integration-works-for-apple-but-it-
wont-for-everyone/
6. Bartleby Research: Analysis of Foxconn's Corporate and Business Level Strategy.
Retrieved from https://www.bartleby.com/essay/Analysis-Of-Foxconns-Corporate-And-
Business-Level-FJU8S7GDU6
7. Riley, J. (2014, July 30). Strategy: Foxconn Pursues Diversification as it Attempts to
Move up the Value Chain [Blog Post]. Retrieved from
https://www.tutor2u.net/business/blog/strategy-foxconn-diversification-moving-up-value-
chain
8. Mundy, S., & Inagaki, K. (2016, January 22). Foxconn bid for Sharp is part of strategy
to diversify. Retrieved from https://www.ft.com/content/0a5e1620-c0f5-11e5-846f-
79b0e3d20eaf
9. Zack. (2018, March 12). Vertical Integration and Foxconn: Watch the Details. Foxconn
News. Retrieved from https://foxconnwi.com/vertical-integration-foxconn-watch-details
10. TrendForce Press Center: TrendForce Expects Foxconn to Enter a New Phase of Vertical
Integration in Mid- and Small-Size Panel Markets with the Acquisition of Sharp. (2016,
February 26). Retrieved from https://www.trendforce.com/presscenter/news/20160226-
9262.html
11. Foxconn. (2020). ZoomInfo. https://www.zoominfo.com/c/foxconn-electronics-
inc/15008205
12. foxconn's competitor. (2020). owler. https://www.owler.com/company/foxconn
13. Swot analysis of FOXCONN: [Essay example], 876 words. (2019, May 14). GradesFixer.
https://gradesfixer.com/free-essay-examples/swot-analysis-of-foxconn/
14. 9 major companies tied to the Apple supply chain. (2020, April 27). Investopedia.
https://www.investopedia.com/articles/investing/090315/10-major-companies-tied-apple-
supply-chain.asp

22
15. Jabil Inc. (April, 2020). Vault. https://www.vault.com/company-profiles/computer-
hardware/jabil-circuit-inc
16. Celestica International LP. (2020, January 29). Celestica announces fourth quarter 2019
financial results. GlobeNewswire News Room. https://www.globenewswire.com/news-
release/2020/01/29/1977099/0/en/Celestica-Announces-Fourth-Quarter-2019-Financial-
Results.html
17. Jabil wins supply chain innovation award | Jabil. (2017). Jabil.com.
https://www.jabil.com/blog/jabil-ascends-the-fortune-list-of-worlds-most-admired-
companies-2017.html
18. Mark, J. (2013). Review: Sanmina vs. Celestica. Optimum Design Associates Blog.
https://blog.optimumdesign.com/review-sanmina-celestica
19. Jabil wins supply chain innovation award | Jabil. (2017). Jabil.com.
https://www.jabil.com/blog/jabil-ascends-the-fortune-list-of-worlds-most-admired-
companies-2017.html
20. Mark, J. (2013). Review: Sanmina vs. Celestica. Optimum Design Associates Blog.
https://blog.optimumdesign.com/review-sanmina-celestica
21. Jabil circuit, Inc. [SWOT analysis] weighted SWOT matrix. (2020). Fern Fort University.
https://fernfortuniversity.com/term-papers/swot/nyse/3651-jabil-circuit--inc-.php
22. Celestica Inc. [SWOT analysis] weighted SWOT matrix. (2020). Fern Fort University.
https://fernfortuniversity.com/term-papers/swot/nyse/3430-celestica-inc-.php
23. Celestica Inc. [SWOT analysis] weighted SWOT matrix. (2020). Fern Fort University.
https://fernfortuniversity.com/term-papers/swot/nyse/3430-celestica-inc-.php
24. 6 Sigma Black Belt Program For Global OEM Leader. (n.d.). TQM CONSULTANTS
CO. LIMITED. Retrieved from https://www.tqm.com.hk/foxconn
25. Apostolou, N. (2012). Foxconn moves into e-distribution. The Register. Retrieved from
https://www.theregister.com/2012/05/11/foxconn_pushes_distribution/
26. Hans Wu, Jessie Shen. (2009). Foxconn lands JDM notebook orders for Dell Adamo
notebooks, say sources. DIGITIMES. Retrieved from
https://www.digitimes.com/news/a20090120PD218.html
27. Liemt, G. v. (n.d.). Hon Hai/Foxconn: which way forward? Retrieved from
https://www.etui.org/.pdf

23
28. Sarah Mishkin, Samantha. (2013). Foxconn challenged as global reach grows. Financial
Times. Retrieved from https://www.ft.com/content/17af9b64-485d-11e2-a1c0-
00144feab49a
29. SUPPLY CHAIN SOLUTIONS. (n.d.). Retrieved from
https://www.foxconnnwe.com/portfolio-view/supply-chain-solutions/
30. The Foxconn Factory Video Tour. (n.d.). Retrieved from http://www.strategos-
m.com/articles/strategy/apple-foxconn-strategy-2.htm
31. The Foxconn Factory Video Tour. (n.d.). Retrieved from http://www.strategos-
m.com/articles/strategy/apple-foxconn-strategy-2.htm

24