A REPORT

ON
“ORGANIZATIONAL BUYING PROCESS”
OF
FOXCONN INTERCONNECT TECHNOLOGY LIMITED (“FIT”)

Submitted By
Maganti Srilekha
Roll No-181135

UNDER THE SUPERVISION

OF
“ Prof Mr .Venkatesh Akella ”

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 Table of Contents

Introduction of Foxconn ............................................................................................................... 3

1.Organizational Buying Process- Foxconn .................................................................................... 4
2.Types of Organizational Buying Behavior For Foxconn- Apple ..................................................... 7
3.Oragisational Buying Process In Diagrammatical Representation………………………………….……………9

4.Buying Center Influence Matrix For Foxconn – Apple ……………………………………………………………….10

5.Purchasing Behavior Buy-Grid Model For Foxconn-Apple……………………………………………………….12
6.Buying Center Participants For Foxconn-Apple……………………………..………………………………………….13

7.Buyer – Seller Relationship For Foxconn – Apple……………………………………………………………….…….15

8.Components That Foxconn Manufacture For iPhone……………………………………………………………….16

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 INTRODUCTION OF FOXCONN

Hon Hai Precision Industry Co., Ltd., trading as Foxconn Technology Group and
better known as Foxconn, is a Taiwanese multinational electronics contract manufacturing
company with its headquarters in Tucheng , New Taipei, Taiwan. Today, it is the world's
largest provider of electronics manufacturing service and the fourth-largest information
technology company by revenue. Its founder and chairman is Terry Gou.

Foxconn Interconnect Technology Limited (“FIT”) focuses on the development,

manufacturing and marketing of electronic and optoelectronic connectors, antennas, acoustic
components, cables and modules for applications in computers, communication equipment,
consumer electronics, automobiles, industrial and green energy field products. With offices
and manufacturing sites located in Asia, the Americas and Europe, FIT is a global leader in
the supply of precision components. automotive, and industrial and medical industries, smart
home.

Their product portfolio spans key categories including Audio, Charging & Power,
Components & Accessories, Medical Devices, Networking & IoT (WiFi). Key products
include cable components, connectors, active optical cables, embedded optical modules,
pluggable transceiver modules, antennas, wireless charging products and components,
acoustic, power and cable accessories Notable products manufactured by Foxconn include the
BlackBerry, iPad, iPhone, iPod, Kindle ,Nintendo 3DS, Nokia devices, Xiaomi devices,
PlayStation 3, PlayStation 4, Wii U, Xbox 360, Xbox One, and the TR4 CPU socket on some
motherboards.

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 1.ORGANISATIONAL BUYING PROCESS – FOXCONN

Assuming these are the suppliers of components to Foxconn

1.Yomura Technologies Inc.

2. Evercom Communication Tech Co., Ltd.

Lead to
continue,
improve or
Identifying drop a
solution to a supplier.
problem
If Decision is buy
Negotiation
Continue to
supplier search

Performance
Order Review
Supplier Implementation
Proposal Selection
Supplier
Product Solicitation
Search
Need Specification
Problem Description
Recognition

Evaluations based to
List of Vendors specified criteria

Determination of
the characteristics
and quantity of the
needed item

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Phase 1: Recognition of a Problem:

The purchasing/buying process begins when someone in the Foxconn recognises a problem
or need that can be met by acquiring goods or services.

The common events that lead to this phase could be:

i. When Foxconn decides to develop a new product and needs new equipment and materials
to produce this product.

ii. It decides to diversify or expand and hence requires a multitude of new suppliers.

iii. Purchasing Manager assesses an opportunity to obtain lower prices or better quality.

iv. Purchased materials turn out to be unsatisfactory and Foxconn searches for another
supplier.

Phase 2: Description of the need:

This phase involves determination of the characteristics and quantity of the needed item. The
general characteristics are reliability, durability, price etc. and the marketer along with the
purchasing manager, engineers and users describe the needs.

The questions that could be posed are:

i. What performance specifications need to be met?

ii. What types of goods and services should be considered?

Phase 3: Product Specification:

Obtaining the input from the second phase, Foxconn develops the technical specifications of
the needed items. In this phase, the product is broken down into items. The items in turn are
sorted into standard ones and new ones which need to be designed.

Phase 4 :Supplier Search:

This phase pertains to the search for the qualified suppliers among the potential sources.
Suppliers such as Yomura Technologies , Evercom communications etc make periodic
visits to Foxconn and create awareness. Brochures are circulated and advertisements placed
in specific media like trade journals. This phase only involves making a list of qualified
suppliers.

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Phase 5: Proposal Solicitation:

The lists of qualified suppliers are further shortened based on some critical factors. For
example, if Foxconn is not willing to try any new firm which has not been in the market for
more than three years, it can delist those suppliers. Then the purchasing departments ask for
proposals to be sent by each supplier.

After evaluations, based on the specified criteria, some suppliers are asked to come over for
formal presentations. The proposal must include product specification, price, delivery period,
payment terms, taxes of experts and duties applicable, transportation cost, cost of transit
insurance and any other relevant cost or free service provided. For purchase of routine
products or services, phases 4 and 5 may occur simultaneously as Foxconn contacts the
qualified suppliers to get the latest information on prices and delivery periods.

For technically complex products and services, a lot of time is spent in analysing proposals in
terms of comparison on products services, deliveries and the landed cost.

Phase 6: Supplier Selection:

Each of the supplier’s presentations are rated according to certain evaluation models.
Foxconn may also attempt to negotiate with its preferred suppliers for better prices and terms
before making a final decision.

Phase 7: Order Routine Specification:

After the suppliers have been selected, the buyer negotiates the final order, listing the
technical specifications, the quantity needed, the expected time of delivery, return policies,
warranties etc.

Phase 8: Performance Review:

The final phase in the process consists of a formal review and feedback regarding product
performance as well as Foxconn’s performance. Foxconn contacts their customers like Apple
, Blackberry , Acer etc and ask for their evaluations which are in turn given to the supplier or
he may rate the supplier on several criteria using a weighted score method or Foxconn might
also aggregate the cost of poor supplier performance to come up with adjusted costs of
purchase including price.

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 2.TYPES OF ORGANISATIONAL BUYING BEHAVIOUR FOR
FOXCONN- APPLE

Buyer-
Apple Seller-
Foxconn

STRAIGHT REBUY
Motherboard
MODIFIED REBUY
Battery Adhevise Strips NEW TASK
Audio Jacks
Cables for chips Charging slots Artificial Intelligence in
Sim card slots upcoming iPhone 11
Wifi chips
USB cable Face recognition in
iPhone X when released
was a new task to them

Every time when Apple is to take a purchase decision, buying situation can be different, it
may or may not be the same as the previous one. The differentiation between the two buying
situations may be caused by the absence of any or all of the following factors .

• Awareness about competing brands in a product group.

• Apple has a decision criterion.

• Apple is able to evaluate and decide on his choice.

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Straight Rebuy:

Straight rebuy is a buying situation in which the buyer routinely reorders something without
any modifications .

✓ Example: Apple purchases or reorders the motherboards on a routine basis from

Foxconn who is on an approved list. In a straight rebuy, Foxconn make an effort to
maintain product and service quality and automate reordering systems to save time.

Modified Rebuy :

The modified rebuy is a business buying situation in which the buyer wants to modify
product specifications, prices, terms, or suppliers. Apple in some components is going to buy
a similar product but there is a significant difference in the purchase from the previous
purchase.

✓ Example : till iPhone 8 , all the iPhone series had headphone jack . After the release
of iPhone X , the jack was removed and has given a direct jack to charger slot .
Removal of headphone jack is the modification made .

New task :

The new task is a business buying situation in which the buyer purchases a product or service
for the first time. Apple has no past experience for few technologies like AI and this is
totally new to buy the products which require some and extensive efforts for them to decide
about the product purchase. It takes longer time to make a decision because it could have a
greater risk or cost and take more time in getting know of the new products.

✓ Example: Apple is coming up with artificial intelligence in iPhone 11 which they

never did it before.

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 3.ORGANIZATIONAL BUYING PROCESS FOR FOXCONN-APPLE IN
DIAGRAMMATICAL REPRESENTATION

STRAIGHT MODIFIED NEW TASK

REBUY REBUY

Charging Artificial Intelligence in

Battery
Audio Slots upcoming iPhone 11
Adhesive strips
Jacks
PURE
ROUTINE

COMPLETE
NEGOTIATION

WIFI chips

Motherboards SIM card

slots Face recognition in
iPhone X when released

Cables for chips USB

cables

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 4.BUYING CENTER INFLUENCE MATRIX FOR FOXCONN – APPLE

Buyer-
Apple Seller-
Foxconn

Phase New Buy Modified Buy Straight Rebuy

Need • Engineering Dept • Production Dept • Production Dept
Identification • R&D Dept • Engineering Dept
• Sales & Marketing Dept

Establishing • R&D Dept • Quality Control • Engineering Dept

Specifications • Engineering Dept Dept • Production Dept
• Production Dept • Engineering Dept

Modification • Engineering Dept • Production Dept • Production Dept

& • R&D Dept • Engineering Dept
Evaluation of
Buying
Alternatives
Supplier • Quality Control Dept • Engineering Dept • Engineering Dept
Selection • R&D Dept • Production Dept • Production Dept
• Engineering Dept

*Common department in three types of buyers in the buying process is Purchasing

department

Need identification:

When Apple decides to develop a new product ,the above departments involve in identifying
their needs and materials to built a product.

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Establishing Specifications

:After finding out their need , Apple’s departments specify their product specifications for
their product development. The specifications can be technical, reliability , durability etc .

Modification and evaluation of buying alternatives:

After the description of product specifications , Apple get a chance to change or modify their
components from Foxconn depending on the parts requirements . In some cases , there are
chances or choosing alternative suppliers .

Supplier Selection :

The supplier’s presentations are rated according to certain evaluation models. Apple may also
attempt to negotiate with its preferred suppliers for better prices and terms before making a
final decision . Along with purchasing department , finance department also plays a major
role in selecting the suppliers.

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 5. B2B -PURCHASING BEHAVIOUR
BUY-GRID MODEL FOR FOXCONN – APPLE

Buyer-
Apple Seller-
Foxconn

Buy Phase New Buy Modified Rebuy Straight Rebuy

1. Need Recognition
2. Need Definition
3. Solution Specification
4. Supplier Identification
5. Proposal Solicitation
6. Proposal evaluation &
Vendor selection
7. Order Routine
Selection
8. Performance Review

Most critical phase of buy class

Sometimes critical phase of buy class

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 6.BUYING CENTER PARTICIPANTS FOR FOXCONN-APPLE

Buyer-
Apple Seller-
Foxconn

USERS
Apple company is the users

INITIATORS
Engineering Dept and , Procurement and Purchase Dept, Production
Dept of the vendor

INFLUENC
ERS R&D Dept , Technical Dept , Expertise Dept, Engineering Dept

BUYERS
Purchase and Finance Dept

GATE
KEEPER Purchase Dept ( Sometimes) and Senior Management
S

DECIDER
Production Dept ,Purchase Dept ( sometimes), Senior Dept

APPROVER

Senior Management , Finance Dept ( sometimes)

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Users: Apple is the user who use the products of Foxconn . Apple is technically sound like
the R&D, engineering who can also communicate well. They also act as initiators.

Initiators: Usually the need for a product/item and in turn Foxconn arises from the Apple.
But there can be occasions when the top management, maintenance or the engineering
department or any such recognise or feel the need. These people who “initiate” or start the
buying process are called initiators. Purchase & Procurement department and production
department of the vendor , both are interconnected and complementary to each other.

Influencers :Technical personnel, experts and consultants and qualified engineers play the
role of influencers by drawing specifications of products. They are, simply put, people in
Apple who influence the buying decision. They can also be the top management when the
cost involved is high and benefits long term

Buyers: Apple who has formal authority to select the supplier and arrange the purchase
terms. They play a very important role in selecting vendors and negotiating and sometimes
help to shape the product specifications. The major roles or responsibilities of buyers are
obtaining proposals or quotes, evaluating them and selecting the supplier, negotiating the
terms and conditions, issuing of purchase orders, follow up and keeping track of deliveries.

Gate Keepers: A gatekeeper is like a filter of information. One the marketer pass through
information before he reaches the decision makers. Understanding the role of the gatekeeper
is critical in the development of Apple’s marketing strategies and the salesperson’s approach.
They allow only that information favourable to their opinion to flow to the decision makers.
By being closest to the action, purchasing managers or those persons involved in a buying
centre may act as gatekeepers. They are the people whom marketer would first get in touch
with. Hence, it so happens that information is usually routed through them. They have the
power to prevent the sellers or information from reaching members of the buying centre.

Decider: Apple’s formal structure is deceptive and the decision might not even be taken in
the purchasing department in some cases . Generally, for routine purchases, the purchase
executive may be the decider. But for high value and technically complex products, senior
executives are the deciders. People who decide on product requirements/specifications and
the suppliers are deciders.

Approver: People in Apple who authorise the proposed actions of deciders or buyers are
approvers. They are also be personnel from top management or finance department .

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 7.BUYER – SELLER RELATIONSHIP FOR FOXCONN – APPLE

Buyer-
Apple Seller-
Foxconn

Seller Proud Seeking Number Hierarchy

Personalities Patrons Internal Obsessed Jumpers
Information
Buyer
Personalities
Serious
Investors

Seeking
Audience

Fulfilment of
Knowledge

Harmonious relations

Conflict relationship

No relationship

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8.COMPONENTS THAT FOXCONN MANUFACTURE FOR IPHONE:

Connector Extender Motherboard for iPhone

Battery Connector Sim Card Holder

Power Jack
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