Foxconn: on the way of organization change
Table of Contents
1.1 Company history
1.2 The series employees’ suicides incidents in 2010.
2. The reasons that compel the Foxconn employees to suicide
2.1 Low salaries brought great economical pressure.
2.2 Strenuous working leads to isolated social relationships and autism. 2.3 Military management caused depression.
3. The grounds for Foxconn to squeeze labor cost.
3.1 Escalading competition between manufacturers deprived the discourse power of Foxconn. 3.2 Appreciation of renminbi and high inflation further increased the cost of production. 4. What are Foxconn’s solutions to increase employees’ well-being and company’s profitability? 4.1 Increasing the worker’s wage significantly after the series of suicides incidents. 4.2 Boosting use of robots in manufacturing within three years. 4.3 Expanding the business in the laptop and tablet fields.
4.4 Moving the Chinese manufacturing plants from coastal cities to inland area. 4.5 Increasing oversea investment for restructuring.
4.6 Transforming by investing in retailing and the photovoltaic (PV) industry. 5. Discussion
5.1 Is Foxconn a sweatshop?
5.2 Raising the salaries significantly increases Foxconn´s expense, but is far from enough to change the worker’s life fundamentally. 5.3 Profitability of Foxconn has decreased far before increasing the workers’ salaries. 5.4 Highly developed coastal cities are no longer suitable for labor-intensive industry. 5.5 As demographic dividend rapidly vanishing in China, Foxconn has to focus on improving efficiency and transforming. 5.6 Innovation is the ultimate solution to the problem of shrinking margins. 5.7 Comparison between Foxconn and BYD—the depth of change decides how far the company can go. 6. Conclusion
1.1 Company History
Hon Hai Precision Industry Co Ltd was founded in 1974 as a manufacturer of television knobs. Foxconn is the trade name for Hon Hai created in 1985 and was officially established as a contract manufacturer company headquartered in Taiwan. Following the open-up of China in the 1980th, Foxconn expanded its business into Mainland China. In 1988 Foxconn opened its first factory in Shenzhen, making computer connectors with less than one hundred employees. The turnover and employee scale started to soar from 1996 as the Longhua industry park in Shenzhen was put into operation (Yi, M. 2009). Nowadays Foxconn has developed into the world’s largest maker of electronic components in contract with many international IT companies, such as Apple, Nokia, Dell, etc. (Bloomberg Business Week. 2010). In 2010 its revenue achieved nearly 7 billion dollars and its total number of employees was approximately 1 million. Foxconn has consecutively been the top exporter in Mainland for 9 years and in 2011 it is ranked no.60 in Fortune Global 500 (CNN News. 2011). 1.2 The series employees’ suicides incidents in 2010
While Foxconn focuses on the competitive advantage in speed, quality, engineering services, flexibility and the low costs of production, the series suicides incidents shocked the whole world in 2010. In the first five months of 2010, thirteen Foxconn workers attempted or committed suicide at the two production factories in Shenzhen (Dean, J. 2010). Ten of the suicidal workers died and the other three were severely injured. All of them were rural migrant workers at the age between 17 and 25—the most important period of life. These consecutive suicides introduced the worst images of Foxconn, as a manufacturer with inhuman ways of treating the workers like torturing the workers mentally and physically monsters (Bloomberg Business Week. 2010). To explore into this story, we will examine the possible factors that lead the workers to attempt or commit suicide and the factors that put Foxconn in such a difficult situation respectively. 2. The reasons that compel the Foxconn employees to...
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