Reference no: EM133080167

At a dinner in February 2011, Steve Jobs of Apple Inc. reportedly responded to President Barack Obama's question about what it would take to make iPhones in the United States and bring those jobs home by saying that these jobs were not coming back. Apple had made the long-run decision that its iPhones and iPads would be made overseas, given cheaper labor, large-scale foreign factories, and the flexibility, diligence, and industrial skills of foreign workers.

Labor cost is actually a small component of total costs for most high-technology companies. More important is the expense of buying parts and managing supply chains that involve hundreds of companies. It has been alleged that Chinese workers assembling iPhones and iPads work excessive overtime, live in crowded dorms, and may have to stand so long that their legs swell. There have been charges and ethical issues raised in that these suppliers did not properly dispose of hazardous waste, falsified records, and disregarded workers' health. Workers have been killed by explosions in the plants and injured by the chemicals used to clean iPhone screens.

Has Apple made the correct long run cost analysis? Why or why not?