Foxconn: Strategic Change Through Acquisitions

Case Solution

Zhigang Tao, May Qin
University of Hong Kong ()

Foxconn, known as the iPhone maker, was the world’s largest electronics manufacturing service provider. Foxconn was founded in Taiwan in 1974. It grew enormously since the mid-1980s after establishing production in mainland China. It benefited from low labor costs in the 1980s and 1990s, as well as China’s open market policies. However, China has undergone significant demographic changes: the working-age population peaked in 2010 and the overall educational level of workers has risen steadily since the 1980s. Both changes put pressure on Foxconn to increase wages. On the demand side, Apple began to diversify its supplier base by helping rival Taiwan EMS supplier Pegatron assemble its products. Foxconn’s profit margin fell significantly after the 2000s, despite efforts to lower costs through automation and product diversification. Given the challenges in both labor costs and customers, Foxconn had to adjust its market position in the new era. The case covers Foxconn’s history, the changing macroeconomic environment, and the steps Foxconn has taken to increase its profitability. The case describes the challenges faced by Foxconn and Foxconn’s repositioning efforts, particularly through acquisition attempts. With Foxconn core competencies in mind, students should explore the strategies that Foxconn has used and suggest future strategies for Foxconn.

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