Question

The fact that Apple has no manufacturing facilities of its own

A) has caused it to build up massive debt on its balance sheet.
B) has enabled it to remain financially lean with virtually no long-term debt.
C) has been problematic for Apple in terms of debt.
D) illustrates that having more fixed assets than rival firms can provide major competitive advantages in a global recession.
E) means that it is in the same position as Sony.

Answer 1

Apple does not have its own manufacturing facilities but uses a global platform for production, leveraging comparative advantage, which enables it to remain financially lean with minimal long-term debt.

Step-by-step explanation:

The statement that Apple has no manufacturing facilities of its own is best addressed by recognizing that Apple indeed uses a global platform for the production of its products such as the iPhone. Apple's strategy involves leveraging the comparative advantage of different regions. For example, the engineering and design work is done in the United States, where there is a comparative advantage in creativity and innovation, while China and Korea have advantages in assembling and manufacturing electronic components, respectively. This global supply chain approach has enabled Apple to remain financially lean with minimal long-term debt, as it avoids the costs of maintaining and operating its own manufacturing facilities.

Therefore, the correct answer to the student's question would be: B) has enabled it to remain financially lean with virtually no long-term debt.