Most of the things that people use today have become automated, and people have changed their lifestyles. Nowadays, people want devices that can simply their life and save them time. They want innovative mobile devices that will enable them to do their work and communicate without restrictions. Many companies have realized this, and they are developing products to meet this need. This has increased the level of competition in the industry. Competition is good for business. It enhances efficiency and productivity, and in most cases, it lowers the prices of the products. When there is high competition in an industry, businesses tend to do all they can to ensure that they retain a large market share.
Organizational culture affects the way an organization handles its ethical decisions. The employees at Apple are dedicated and passionate about their work. They believe in their company and they go to great lengths to promote it by telling others about their products. As a company, Apple believes that all employees should act properly in all situations, regardless of their position or status in the company. The company believes that all employees should demonstrate integrity by being honest, respectful, compliant, and maintaining confidentiality. This means incorporating these values in all their operations. The company incorporates these values when making all its ethical decisions.
Apple’s industry is one of the most competitive industries. Apple deals with a wide range of products, all involving technology. It is in various industries such as the computer industry, mobile phones, and music download industries among others. Perhaps the highest competition is in the mobile phone industry, where the company has revolutionized the way people use mobile technology. It has incorporated different technologies in one product. Its mobile phones are able to perform multiple functions, and they resemble a mini computer.
Intense competition can make some managers desperate, and this makes them see unacceptable business practices as acceptable. They may end up taking action that is questionable just so that they can ensure that their business survives (Ferrell at al. 97). In some cases, managers pressed by intense competition from different competitors in the industry, can establish unrealistic goals, which they expect their employees to meet. When the employees are pressured to meet these goals, they can result to using unethical means of achieving the goals. In some cases, the managers may press the employees to reach the target, and they may pass on the idea that the results matter more than the means of getting there (Trevino and Nelson 24). This means that the employees will do everything that will bring those profits, and which will ensure they reach their target. Often times, businesses end up compromising their ethics so that they can stay ahead of the competition. In some cases, this has resulted in lowering the quality of their products to save on costs. Businesses do this so that they can offer cheap prices to the consumers.
High competition in the industry can affect the ethical risks in the company’s operations. For instance, the ethical issue facing the company’s product, the iPhone 4, might have been because of the intense competition in the industry. The company did not take enough time to ensure that its products were working efficiently. Manufacturing high quality products is one of the most important elements of the company’s operations.
One issue requiring consistent oversight is product quality. Apple’s brand hinges upon product quality, so mistakes can create serious ethical dilemmas. In the fast-paced electronics industry, where several new products are introduced every year, mistakes can become hard to detect before product introduction. After Apple introduced the iPhone 4, consumers began to complain of reception problems. The problems were caused by antenna interference that occurred when users held the phone a certain way. Public relations experts have criticized Apple for appearing to minimize the problem rather than reacting quickly to remedy it.
The company ensures that its customers have the optimum experience when using its products. The intense competition facing Apple Inc. from companies such as Samsung might have been the reason why the company compromised its products. Apple has also been accused of hiring cheap labor, which in itself is unethical. Some of the company’s products are manufactured in Taiwan, where the employees work in abusive conditions (Leonard).
Apple outsources its production to the Foxconn factory in China. Foxconn hired young 16-18 year old kids under the disguise of an internship. However, all they needed were more hands on deck to meet production schedules. Technically, when word got out that Foxconn was hiring “interns”, Apple could have just fell on the fact that they hired Foxconn to do the work and it was not their concern how Foxconn met their obligations.
Apple could have turned their back to the issue, but being such a behemoth with so much in monetary resources, it just makes sense to tackle the issue. As mentioned earlier, they already had procedures in place to track the sustainability issues. Hiding it would be an ethical issue and with all eyes on Apple Inc.’s success. The topic of child labor is a sensitive one, it makes sense for Apple to confront this issue, and that is exactly the goal they set for themselves.
Apple now releases a yearly sustainability reports to track instances of child labor, sustainable sourcing of materials, and labor hours. With the information at hand, Apple is able to divert resources to solve their problems. For example, in last year’s report Apple cited 11 factories with child laborers, with 107 active cases and 70 historical cases. In this year’s report Apple cited 8 factories, with 11 active cases and 12 historical cases. This is a blatant example of the response Apple had to its Foxconn child laborer incident. In addition, long hours are a big problem in the electronics world, Apple has chosen to instill a 60-hour workweek that requires every worker to have one day off per week. Overtime needs to be voluntary. By performing this yearly audit, Apple is able to compare yearly numbers. It can gain insights to answer certain questions: Are more workers complying with a weekly day off? What is the average number of hours worked, is overtime used? How can we schedule to decrease overtime?
I find Apple’s actions as sincere, not only are they acting ethically in the face of this supply chain problem, but Apple has always made decisions keeping the good interests of its followers, for example, after Consumer Reports would not endorse the product, Apple provided free bumpers and cases for a certain period of time that resolved the reception problems. This product issue did not stop millions of consumers from purchasing the iPhone 4, but it does reiterate the great care Apple must take regarding product quality. Consumers view product quality as inseparable from Apple. This product issue did not stop millions of consumers from purchasing the iPhone 4, but it does reiterate the great care Apple must take regarding product quality. Hence, a quality mishap could damage the Apple’s strength. Apple understands this, and is always quick act on problems as early as they can.
Apple hits close to home for me. I’ve admired Steve Jobs for as long as I could remember, I’ve admired how Apple operates on all levels. To be honest I wanted to believe Apple is a perfect ethical company, which I had believed for a while, until I realized that all large companies have their issues, but it’s how they handle issues that differentiates the ethical and unethical companies. As I am an avid Apple user I appreciate that Apple can act ethically, I would not like that my favorite company was unethical, it may not stop me from purchasing something, but I would feel some guilt if I had. What I take away from this situation is that no matter the size and success of the company it is always beneficial to tackle your ethical issues. By doing so, it is much less cowardly than having to turn your back to the issue and not take responsibility.
The Shareholder Theory discusses the duty of a company to maximize profits, it also suggests the duty to enhance the reputation of the firm and take interest in the public good. Milton Friedman states that a company is only responsible to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game. Apple does take an interest in the public good, but based on the margins they are making on their products it is hard to say that Apple isn’t conforming to shareholder theory. With the massive size of Apple, it is one of the few companies that can keep shareholders in mind, while utilizing other resources to support stakeholders. As customers, we would all happily pay a premium for Apple products because of their longevity and appeal. If Apple was any other company I feel it would receive more scrutiny for its pricing models. That is the magic of Apple, people don’t feel they are overpaying because they can get something that they can’t get elsewhere.
Stakeholder Theory refers to any individual who have stake in the company and is affected by the success or failure of the organization (employee, customer, suppliers, anything but shareholder). Apple Inc., in 2011, was accused of treating their employees inhumanly and like machines. To cut costs and increase profits, Apple hired roughly 500,000 employees and started to manufacture their products at two factories in southern China. Before an employee can work for Apple, they must sign an anti-suicide contract pledging that they will not attempt to commit suicide due to the large number of deaths in 2011. As you might already know, Apple has many products around the world and because of that, there’s a constant demand for iPhones, iPads, iPods, and Macs.
Just days before the first iPhone was released, executives called in to change iPhone screens from plastic to glass. The workers were woken up at 3 a.m., given brief instructions on how to use glass cleaning chemicals and other procedures, and began mass production of the phones. Situations like these have been triggers for workers to commit suicide. This obviously sheds poor light on Apple’s operations. Thus, in response Apple installed anti-suicide nets on the outside of all the dorm windows. Let’s not forget that Foxconn also produces other gadgets for technology companies like Sony. I believe that Apple was able to escape the issue in good light, as it was the one of the many companies that Foxconn works with that had taken serious action. Apple recognized the need to protect its workers, although they are technically Foxconn and not Apple employees, Apple ethics reach down to all inputs for its products and it felt the need to monitor them all.
Since the publicity of Apple’s suppliers has gotten out, Apple, Inc. has taken steps to decrease the amount of the issues associated with the factory employees (here stakeholders). Apple had tracked weekly work hours for over one million workers throughout their supply chain since 2007. By having this data Apple can make sure the trends are moving in the direction they need. Apple reports that it has driven suppliers to support the 60-hour-workweek. Thus far, about 95% compliance has been achieved.
Another area of improvement is more time off for workers. Apple has seen a 97% compliance with this rule. With focused efforts on the stakeholders, Apple is able to make the work/life balance more manageable. I believe this stems from Apple’s stressing of equity in the workplace. This attitude can be attributed to the influences of Steve Job and the change to a flatter organization. This means there is more transparency in the company and more workers feel their work having impacts.
Utilitarianism is the view that one should do things to maximize happiness for themselves and for others. The majority of the people who work in the plants feel upset and are depressed because of the conditions. When this story broke out, it somewhat stained the reputation of the Apple brand. Some loyal customers might view Apple now as a terrible and unethical company and therefore buy other brands of computers, phones, and so on. This means less money for the owners, and less money in the pockets of shareholders as well. What this shows is the need to not just maximize the happiness of some stakeholders, but of all of them: customers, suppliers, employees, etc.
As mentioned earlier, Apple is very quick to solve the problem of their products without any convenience to their stakeholders (here customers). For example, when iOS 8.0 was released, customers were angered with the slow download speeds and glitches of the software. Within the next 24 hours Apple had updated their software and the download speeds improved dramatically. This is a simple example but shows the level to which Apple maintains positive relations with their stakeholder, in this case perhaps their most important.
Virtue Theory deals with the dialectic between community and individual, certain behaviors are championed others disappointing, humans are social beings thus have to practice ethics, Apple may have let the problems at Foxconn fester for too long, which led to losing trust from some Apple customers. This is to show that Apple stands upon a few key virtues. The first virtue is keeping the trust of customers. Since the inception of Apple, Inc. the company has been bent on producing the highest quality products. But what differentiates Apple is their ability to provide a product that is enjoyable to use. As customers we have expectations. Apple knows they must provide a solution to satisfy the customers, and with their stressing of the virtue of customer trust, they have always been able to deliver. The second virtue is transparency. In response to outside pressure, Apple this year published a list of its 156 suppliers, representing almost all its supply chain, for the first time. It also joined the Fair Labor Association, becoming the first technology company to do so. Apple has also worked with Chinese labor rights advocates, environmental groups, and has agreed to allow outside monitors into its suppliers’ factories. I feel this decision was a difficult one for Apple to make, considering its prior stressing of secrecy in company dealings. However, in this case, transparency makes sense, showing that Apple has nothing to hide and is focused on regaining the trust of doubters.
There are reasons why Apple’s ethical culture is where it is. Apple applies the principles of Hard Trust, Real Trust and Good Trust to promote their culture. Apple has built Hard Trust, for example, by requiring factories to sign contracts that guarantee that they adhere to the guidelines set in place. There are no exceptions. This transparency is one aspect of Hard Trust implemented by Apple towards building of an ethical culture. Here is an example that illustrates that there are no exceptions. In a supplier report, Apple had divulged that they had fired a supplier in Guangdong, China, because they had employed 74 workers under the age of 16, with fake papers. Apple caught this by not simply having a contract in place with this supplier, but also by having regular audits to enforce compliance.
Apple has instilled Real Trust since its inception. Apple has always been associated with excellent product quality and good reputation to uphold. Any slip in quality now would show up as a bad thing for Apple. When companies lead, and not react, the trust is truly there. This last point deals directly with Good Trust. This means that the company cares about ethics and builds a culture where ethical problems are identified early and solved. For example, in June 2014, Apple found that iPhone chargers in 37 European countries were overheating. So they decided to exchange the affected power adapter for a new one. Clearly such a recall means Apple incurred a significant cost in terms of time, money and resources. However, for Apple, this meant caring about the quality of the product and meeting the expectations of the users.
Considering the actions Apple has taken when facing ethical dilemmas, it has handled the situations in the correct way. Being a leader in the tech industry, they are setting a good example by considering ethics from an early point. By tracking supplier data, they found problems proactively and fixed them. Executives have created an organization that is collaborative and innovative. This has allowed more freedom in the company and a greater collaboration towards the end goal.
One thing that surprises me is that the people who criticize Apple, do not take its size into account. To put things in perspective, let us analyze the size of Apple and look for a more objective way to evaluate ethical practices at Apple. If we assume that average revenues of a public company in the US is approximately $100 to $200 million per year, then Apple is equal to about a 1000 such companies. Can you imagine the degree of complexity involved in managing 1000 publicly listed companies? How many things can go wrong, in spite of best intentions and best practices, out of sheer randomness? So I think it is much fairer to ask of Apple: Does Apple have more ethical challenges than the cumulative number of such challenges in a 1000 publicly listed companies? I doubt if anyone knows the answer to this question because no one is interested in those 1000 companies. Apple has a big brand name and any journalist that criticizes or exposes practices at Apple is likely to get more attention. This makes it a bit harder to analyze Apple’s ethics in a fair and ethical way!
How do you think Apple has handled the various ethical issues that it has faced in the past? I think that Apple has responded well to a majority of the ethical claims brought against it. For instance, it has ensured that it does not use any toxic chemicals to manufacture its products.
