Abstract
The report aims at finding out whether practicing strong business ethics and good corporate social responsibility has an impact on the operations of Apple. In essence, these two concepts provide a coherent framework that is used to explore the relationships within the business and communities in which they are operating. In other words, firms with strong business ethics and social responsibility have increased efficiency hence contributed to the firm’s performance. In addition, business organizations with increased ethical and socially responsible practices have enhanced customer satisfaction, which in turn adds more value to the shareholders. The concept of social responsibility encompasses practices that the firm undertakes to increase efficiency in the management of resources as well as enhancing good relations with customers, suppliers, employees as well as shareholders.
Introduction
Apple Inc. is a publicly listed American company specializing in the production of high technology electronic products, computer hardware, and software (Apple Inc., 2012). Under the electronic hardware category, firm products include personal computers, media devices, mobile communication, and portable-digital music players. In addition to high tech hardware devices, the firm produces a variety of software applications, including third-party digital content applications and networking solutions (Apple Inc., 2012). Within the mobile communications category, the firm has launched into the market a variety of Smartphones, including iPhone and other Android Smartphones, that have significantly hit the world Smartphone market.
Apple Current Position in Ethical and Social Responsibility
Apple’s ethical code of conduct is depicted on Form 10-K annual reports as required by the SEC filings (Apple Inc., 2012). The firm is expected to be ethical and socially responsible in the management of its resources, including economic, human capital, and provide good services that meet the needs of the customers. Besides, the firm is expected to comply with set rules and regulations in all the areas of its operations. The business code of conduct specifies the manner in which the firm conducts its activities ethically and remains socially responsible in all areas of operation.
The expectations are that the firm conducts all its business activities ethically, honestly, and in full compliance with laws and regulations that govern the business operations (Meyer, 2012). Essentially, ethical conduct is applicable in all the business decisions affecting all the divisions of the firm worldwide. Moreover, the firm’s code of conduct provides a procedure on corporate governance, information disclosure, environment, and health as well as safety and non-corruption (Apple Inc., 2012).
In fact, the firm has adopted GRI and G3.1 indices that take into consideration critical issues that touch everyday activities of its stakeholders ranging from economy to society and labor. They control the environment and human rights. The firm utilizes these indices to ensure that compliance with corporate social responsibilities in terms of governance, environment, and suppliers’ responsibilities meet the required standards (Bajarin, 2011).
Besides, the firm reviews and publishes its corporate social responsibilities reports each year, ranging from governance to suppliers’ responsibility. The reports show in detail how the firm complied with and attained the required standards in these areas. For example, in suppliers’ responsibility, the firm has taken into consideration the indicators that report on measures that ensure the abolition of child labor. In fact, such indices are within human rights and labor regulations. Further, on the product and environment reports, the firm has applied the performance indicators set out the initiatives that help in the reduction of the environmental impact of its products (Bajarin, 2011). The products of Apple are made to be energy efficient. Besides, they are made to be powerful, while fewer materials are used to ensure reduced carbon emissions.
Moreover, most of the firm’s products are outsourced for manufacturing in different countries around the globe. The strategy calls for strict adherence to social responsibility and ethical conduct that has been put in place by the firm, particularly on its suppliers. According to the firm suppliers’ responsibility, Apple is committed to the highest standards of social responsibility across its worldwide supply chain (Linzmayer, 2006). The firm requires that all its suppliers provide safe working conditions for all the workers, respect them, protect the dignity of workers, and apply environmentally responsible manufacturing process. The firm ensures compliance through various measures including suppliers manufacturing factory audits as well as conducting industry-leading training programs.
The Impact of Publishing Ethics and Social Responsibility Violations
The violations of labor laws and workers’ rights by supplying companies have negatively influenced the reputation of the firm, particularly the brands associated with supply firms. In fact, Apple’s sales of its products, particularly iPads and iPhones, plummeted in 2009 and 2010 financial year following reports on the violation of labor laws and human rights in the major firm supplier Foxconn. Most of the consumers started to question the firm’s responsibility particularly when it comes to ethical issues. Foxconn is one of the main final assembly partners of Apple (Bajarin, 2011).
Foxconn military style of managing workers that caused in a series of suicides, the hiring of underage workers and the violations of other labor laws and human rights has resulted in a number of customers questioning the conditions in which most of the products were manufactured and the commitment of Apple to ethical conduct and social responsibility. The violations of human rights and other labor laws as well as non-adherence to the ethical codes of conduct affected not only Foxconn but also the firms associated with its product lines. Apple plummeted sales on iPhones and iPads as the damaged reputation prompted its investigations at Foxconn plants in a bid to ensure compliance with the suppliers’ code of conduct.
The effects of Foxconn actions on Apple brand forced the firm to address the situation and pressure Foxconn to resolve the pay dispute that had prompted suicide. Apart from the pressure to change the managing style and observance of human rights, Apple reviewed it supplier’s code and came up with various strategies that ensured its compliance (Bajarin, 2011). The firm noted the importance of the consequences of the supplier behavior particularly on the brand’s reputation. Most of the American consumers became concerned with the firm. Besides, majority of Apples products users questioned if the iconic firm that is embraced globally is a model of the future where profits and technological necessity rule over humanity and compassionate business practices.
Methods Apple can Apply to Ensure Suppliers Compliance to Wages and Benefit Standards
The supplier code of conduct provides a framework that all the suppliers should ensure compliance with. Generally, the supplier code of conduct requires that suppliers respect and uphold the rights of workers and provide information concerning their rights, respect and uphold the workers dignity (Meyer, 2012). Moreover, the firm requires that suppliers do away with discrimination, involuntary and underage labor and ensure the compensation adheres to applicable laws and regulations.
The firm can apply various strategies to make sure that suppliers follow the stated codes. For instance, the firm can conduct thorough audits on its supplier factories that cover a wide range of acceptable practices including compensation, working and living conditions as well as health and safety. In case suppliers have not met the minimum threshold, the firm can terminate the contract with them (Meyer, 2012). Apart from audits to ensure compliance, the firm can also conduct wide industrial training on areas, such as health and safety, child labor and human rights and, most importantly, on acceptable compensation practices. The HR managers of the supplier firms should be trained on labor laws and the need to provide appropriate compensation to the workers.
Whether Apple’s Customers would Pay Extra Prices to Meet the Wages and Benefit Standards
Customers will always be willing to pay for justified prices. In situations where the firm product’s prices are justifiably increased to cater for the cost of increased labor, customers will be willing to pay more for the products. Even though the product prices are a major determinant in purchasing decisions, other factors also play a critical role (Boone & Kurtz, 2013). In particular, consumers will always buy products at higher costs when the prices are justified. Most firms opt for cheap labor to cut increased cost of production and offer products at competitive prices. The reason explains why most of the Apples suppliers flout labor laws through offering low wages and hiring underage workers. However, in the current business environment where consumers are more concerned with ethical conducts and aware of most of the production processes, customers will always be willing to pay extra as long as the prices are justified.
The Current Apple Marketing Strategy
The firm’s current strategy focuses on enhancing its market share in the developing economies and ensuring that its products meet the needs of the target clientele. In fact, the firm aims its products to middle and upper class income clientele since the demographic is ready to pay for increased and better user experience the Apple products currently offer (Linzmayer, 2006). Through the current strategy, the firm ensures that their extensive lines of products remain appealing to the clientele of all ages.
Actions to Improve Competitive Advantage of the Firm
The firm should apply its technological breakthroughs to continue producing quality products that attract the larger audience of clientele. In other words, the firm should continue using its innovative and technological capabilities to manufacture products that meet the current needs of the clientele and go beyond their expectations (Boone & Kurtz, 2013). Essentially, the firm should continue to be innovative on its line of products and ensure the aesthetic appeal to the target clientele. For instance, the use of technological breakthroughs in the product development has been applied by the firm and enabled the attainment of its current competitive position as well as increased market share in the global market.
The second action is to improve the effectiveness and efficiency in the supply chain. Even though the firms supply chain has been ranked as one of the world’s superiors, the supplier side of the supply chain has been dogged by controversies. The firm’s main supplier Foxconn was accused of flouting the labor laws and human rights abuses, which have negatively influenced the reputation of Apple as a result. To improve its competitive advantage, the firm has to ensure that its suppliers remain ethical in all their conducts and socially responsible for the people hired within the immediate environment.
References
Apple Inc. (2012). 2012 annual report. Washington, DC: United States Securities and Exchange Commission. Web.
Bajarin, T. (2011, February 28). Apple’s strategic advantage. PC Magazine. Web.
Boone, L. E., & Kurtz, D. L. (2013). Contemporary business. Hoboken, NJ: John Wiley and Sons Inc. Web.
Linzmayer, O. (2006). Legend of Apple. Beijing, China: Qinghua University Press. Web.
Meyer, C. (2012). Strategic innovation: Apple’s business strategy. Web.