Welcome to professors’ picks, offering a curated selection of FT articles by and for business school faculty to connect classrooms to current events and to develop students’ critical thinking.
Read all submissions at www.ft.com/bschoolpicks. Save this link in myFT to receive emails alerting you to each new edition. Search the tags for relevant topics to illustrate teaching points.
Comments or contributions? Get in touch at bschool@ft.com.
International business strategy
Apple proposes Indonesian factory in bid to reverse iPhone 16 ban
Indonesia says $1bn offer from Apple not enough to lift iPhone 16 ban
Tags: Technology, Foreign direct Iinvestment, local content requirements, Indonesia
Summary: Indonesia has imposed a 40 per cent local content requirement (LCR) on smartphones, and barred sales of the iPhone 16 because of Apple’s failure to comply. The policy is aimed at boosting local manufacturing, increasing job creation and reducing dependence on imports. Apple initially offered to invest $10mn, later raising it to $1bn, for an AirTag plant, but Indonesia insisted investments should directly contribute to iPhone production. While LCRs can foster domestic industries, they may also deter foreign direct investment by increasing costs and regulatory uncertainty.
Classroom application: This example allows students to examine the role of local content policies in shaping investment decisions, exploring whether such regulations encourage industrial growth or act as barriers to trade. Faculty can also guide discussions on Apple’s strategic options: compliance, negotiation, or exiting the Indonesian market.
Questions
What are local content requirements, and how do they affect foreign direct investment?
What economic and political objectives is Indonesia trying to achieve by enforcing its 40 per cent local content requirement?
Does Apple’s $1bn investment proposal align with the intent of Indonesia’s local content requirements? Why/why not?
Considering the local content requirements in Indonesia, evaluate whether entering a joint venture (JV) would be a sensible strategy for Apple. What are the potential opportunities and challenges it could face? Does this strategy align with its long-term objectives in the Indonesian market?
What lessons does Apple’s experience offer for multinational firms entering markets with strong regulatory environments?
Geopolitics, Global Supply Chains
Apple hires workers in India as it looks to open first flagship stores
‘A shot across the bow’: how geopolitics threatens Apple’s dependence on China
Tags: Geopolitics, US-China Relations, China, Apple
Summary: Amid escalating US-China tensions, Apple faces increasing challenges in China, where it both manufactures the majority of its products and generates nearly 20 per cent of its global sales. A recent government ban on iPhones in certain agencies signals Beijing’s growing economic nationalism and strategic retaliation against US restrictions on Chinese tech firms like Huawei. In response, Apple is accelerating its supply chain diversification, shifting production to India and Vietnam to mitigate risks. The case highlights how geopolitical tensions are reshaping global trade and the strategic problems multinational corporations face in host markets.
Classroom application: This case enables students to explore the effects of geopolitical risk on multinational corporate strategy, focusing on Apple’s supply chain shifts and the risks of over-reliance on a single market. Faculty can facilitate debates on whether Apple should fully decouple from China or maintain strategic engagement, comparing it to other companies like Tesla, Samsung and TikTok that have faced similar dilemmas.
Questions
What are the key drivers of Apple’s diversification strategy away from China, and why is India an attractive destination?
What does the phrase “a shot across the bow” imply about the nature of China’s response? Is China targeting Apple specifically?
What are the long-term implications for global supply chains if US-China tensions continue to escalate?
How are India’s ambitions to become a global manufacturing hub affected by its restrictions on Chinese foreign direct investment and bottlenecks in processing Chinese tech workers’ visas, which Indian industry representatives say is “critical for the development of the electronics industry” and the “flow of skills”? What challenges do these policies pose for multinational corporations shifting production from China?
Mohamed Genawi, lecturer, Manchester Metropolitan University Business School
Microeconomics
Spotify reports first annual profit as premium subscriber numbers surge
Tags: Microeconomics, pricing power, profitability, streaming, music
Summary: Sixteen years after launch, Spotify posted its first annual operating profit. With 11 per cent more paying customers and a higher revenue per user, the company achieved a 16 per cent increase in revenue. Pointing out new features such as uninterrupted video podcasts as well as personalised AI products, Spotify’s chief executive Daniel Ek is optimistic about continued growth and improving margins in the future.
Classroom application: This article provides an opportunity for faculty and students to analyse challenges to profitability in a high-growth tech industry.
Questions
Why did it take so long for Spotify to finally turn a profit?
What is the company’s biggest threat to profitability?
Are cost cuts or innovative features such as personalised playlists and video podcasts sufficient to become profitable?
What logic underpinned Spotify’s decision from 2020 onwards to invest substantial amounts into podcasts?
Which lessons could Spotify learn from Netflix, a company worth three times more and achieving an operating profit seven times larger?
Stefan Legge, lecturer, University of St Gallen
Automation
Itsu’s self-service lesson for retailers on what robots do best
Tags: Automation, consumer behaviour, human touchpoints, retail, customer service, data, leadership, differentiation, food sector
Summary: At a time when automation is rising across the service industry and labour costs are set to increase drastically, at least in the UK, sushi chain Itsu, famous for its early adoption of robotics throughout the customer service experience, has announced that it is to introduce more human service touchpoints in its restaurants. Founder Julian Metcalfe recently stated, “I think we have embraced technology too quickly.”
Application: This can serve as a mini case study for discussion on the themes of human vs machine service experience; customer journey optimisation (including the ability to collect different types of data at different touchpoints); changes in consumer behaviour in an increasingly automated world; human interaction as a differentiating factor in an automated world; and the power of bold, audacious leadership decisions. Instructors should be creative in how they use the questions below — staging a debate between two sides of the argument for or against more human interaction, role playing the part of service employees at Itsu restaurants, designing a training program for new service employees, etc
Questions
What does Itsu have to gain by putting more employees in its restaurants. How would each of these elements turn into economic value for Itsu? How would you build a business case to present to Itsu’s leadership team?
How would you go about understanding what specific touchpoints in a customer’s restaurant journey would benefit from more human and less machine interaction? What steps would you take if you were charged to explore this question?
Does increased human interaction offer an opportunity for a service brand to differentiate itself in the market? How could that be done? Do you think the extra cost of hiring more service employees should be reflected in higher prices, or is there another way to defray the extra costs?
Thinking of your personal experience as a consumer, do you agree with Metcalfe that technology may have been embraced too quickly across the service sector in general? Provide arguments for your views
What other service environments would benefit from some rethinking of the machine/human ratio? How would you build the business case for this change if you were to present it to the company’s executive team?
How would you characterise Julian Metcalfe’s decision? What does this decision suggest about his leadership skills? What are some of the immediate outcomes and how would you characterise them for his own and Itsu’s positioning in a crowded ethnic fast food market?
Marie Taillard, Head of faculty, ESCP
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