1. Examine Apple’s current position on the company’s ethical and social responsibilities, and determine whether or not the company has met these responsibilities. Provide two (2) examples that support your position.
In contemporary and competitive business environment, corporate social responsibility becomes integrated part of the companies’ marketing strategy. Companies across the world are emphasizing on corporate social responsibility to gain competitive advantage and to develop positive image. Apple is also fulfilling its economic, legal, social and ethical responsibilities by adopting contemporary processes and implementing strict standards. Apple was established in the year 1976 by Steve Jobs, Ronald Wayne & Steve Wozniak. Over the period Apple has achieved new heights of success by focusing of innovation and CSR. The company grown from a computer kit provider to large portfolio of personal computers, Smart phone, iPod and various other products. Apple is now another name of innovation and technology. Through several years Apple attempts to be ethically and socially responsible towards its internal and external stakeholders.
Apple is the world leader in Smart phones and electronics industry. The company has redefined the smart phone market due to its continuous innovations and technological distinction. Though Apple has succeeded in making image of innovator, the company appears as a follower and not an innovator when it comes to ethical practices and social responsibilities. The company is criticized for overlooking ethical practices and not fulfilling its social responsibilities. After surfacing of some unpleasant incidents, Apple now strives for achieving the status of ethically and socially responsible company. Apple has currently taken various steps that indicate towards company’s determination to be an ethically and socially responsible company (Nova and Shapiro, 2013).
Apple informs about company’s determination on ethical and social responsibilities on its website in these words, “Apple is committed to ensuring the highest standards of social responsibility wherever our products are made. We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes” (Apple, 2013). Apple has extended its support towards promoting education globally. Apple, through its educational initiatives, provides latest technology to teachers and students. Apple provides technological assistance in every kind of education. Apple has collaborated with Red Cross and has redesigned its iTunes application for making donations easier in case of epidemics or accidents (Carroll and Buchholtz, 2012).
Apple also has expressed its commitment for the safety of environment. Apple facilities in US are environment friendly and use renewable energy as source of power. Apple reiterates its commitment to the environment by measuring its carbon emission levels on a regular basis. Company ensures that the carbon emission level is maintained as per norms of environment protection. Apple also uses less toxic substances in their products and saves people and the environment. Using recycled equipment’s in Apple’s devices is another way, company contributes in the environment (Apple, 2013).
2. Determine the impact that the publication of ethics and social responsibilities violations made by Apple’s suppliers has had on Apple’s reputation. Support your response with examples of the impact in question.
A lot has been alleged and published about unethical practices of Apple and its suppliers. Several instances have been reported in various magazines and newspapers that indicate apple’s minimal concern about ethical practices and social responsibilities. Publication of such news substantially impacted reputation of the company and company was compelled to redesign its policies of ethical and social responsibilities. Apple took various steps to improve its image and reputation after incidents of child labor, labor exploitation, safety issues and use of toxic substances became public.
In the year 2009, one of apple’s important suppliers Wintek was found using n-hexane in the touch screens that were used in Apple iPhone. This substance started causing various health related problems in workers. Workers complained about their issues but when the management did nothing, they were forced to demonstrate against the management. When the issue became public, the company management was forced to prevent the use of n-Hexane on the instructions of Apple. However, it was revealed later that Wintek pressurized workers and took resignations from them after the dust was settled.
Another embarrassing incident for the Apple was reported in the year 2012 when one of major suppliers of Apple, Foxconn was found involved in using children as workers in its Yantai plant. Foxconn employed school going children and forced them to work twelve hours a day. Their wages were very low but they were compelled to work more than twelve hours. Some of them were forced to work overtime without pay. When this incident was reported, Apple was targeted by various NGO’s and human right organizations.
3. Suggest two (2) methods that Apple can utilize to ensure that its suppliers adhere to wage and benefits standards going forward. Justify your response.
Apple has manufacturing facilities across the world. The company is manufacturing its products in around 750 locations due to high demand. All manufacturing facilities have large employees and supplier base. Majority of manufacturing facilities (around 600) are located in Asia. Out of 600 around 330 are located in the China. Apple developed and implemented supplier’s code of conduct, after identifying the ongoing workers issues at manufacturing facilities. It is responsibility of the Apple to ensure that all its suppliers and manufactures adhere with code of conduct and provide wage and benefits to all workers as mentioned by the Apple. A large percentage of overseas operation requires company to have effective monitoring and controlling mechanism of the suppliers in place.
Two methods that Apple can adopt in order to ensure that its suppliers adhere with wage and benefits standards are: integration of suppliers’ wage and benefits standards in suppliers’ work contract, and interviews and feedbacks from the employees who are working with suppliers. Apple should consider wage and benefits standards of the suppliers while selecting and awarding them work. Apple should clearly write desired wage and benefits standards in the suppliers’ work contract along with the actions that can be taken if suppliers do not follow those actions. Apple should mentioned strict actions such as termination of contract, heavy penalty, or cancelation of service for specific time period in case supplier do not pay the required wages and benefits to its workers. Google has successfully adopted this method and achieved significant performance.
Apple has increased number of audits significantly over a period of three years. In year 2012 Apple has conducted audit of 393 manufacturing facilities and 1.5 million workers. Apple still not covering a large number manufacturing facilities and employees, and performance of the suppliers is clearly visible in Apple’s report which says 72 percent compliance on wage and benefit category (Nova and Shapiro, 2013). Apple should increase the frequency of its audit and conduct interviews of the employees in order to understand the real situation. For example in China, people are not allowed to organize unions, freely express their ideas to the world forum and not even to collective bargain. Therefore, it is important for the company to directly converse with the workers in order to understand the actual situation.
4. Determine whether or not you believe that Apple’s customers would be willing to pay more for its products if Apple had to increase selling prices in order to provide better wages and benefits for suppliers’ workers. Provide a rationale for your position.
Apple is outsourcing its services to the developing countries in order to save the cost and provide products to the consumers at competitive rates. The major source of cost reduction is low labor cost, long working hours and child labors. Suppliers violate code of conducts in order to manufacture products at minimum possible cost. All unethical practices reduce the wage and benefits allocated to the worker. Increase in price of Apple’s products and diversion of that additional money to the workers could be an effective solution to the ‘wage and benefits’ problem. I believe that consumers will pay more if the benefits are going to the poor workers who are working very hard to earn their livelihood. Apple is catering to the market that is technology driven and not very cost sensitive. People who like Apple’s products will buy them even they cost them little extra.
Mohr & Webb (2005) in their article analyzed the relationship between price, CSR and purchase of the product. Findings of the empirical study revealed that consumers prefer to purchase products of the companies that involve in CSR. If companies spending significant part of their budget on philanthropic activities, consumers do not mind paying extra (Mohr and Webb, 2005). McWilliams and Siegel (2001) in their study also confirmed that level of CSR activities is positively related with the demand of the product irrespective of prices. The author said that the high level of CSR activities means high positive publicity and higher inclination of consumers towards products. Therefore, Apple can increase the prices of its products. However, Company should maintain transparency and inform consumers about how additional money taken from them is going to the workers (McWilliams & Siegel, 2001).
5. Analyze Apple’s current overall marketing strategy. Recommend two (2) actions that Apple can take in order to improve its competitive advantage in the global marketplace. Support your response with examples of instances where your recommendations yielded the desired results.
Apple’s marketing strategy focuses on delivering most innovative technology to the consumers before its rivals. Apple design its marketing strategy and processes keeping in mind the customer and changing requirements of the customers. The company hires employees who are customer obsessed. Apple adopt unique approach to advertise its products differently from its competitors. The marketing strategy of the company is effective but away from CSR. Steve Jobs, man behind Apple was never interested in humanitarian activities. Steve’s focus was always on customers and delivering best to them.
Increasing level of competition, increasing share of Samsung in world market, pressure to reduce cost, decreasing product life cycle, and high cost of research and development generates a need for Apple to consider CSR and integrate it with marketing strategy. Over past few years Apple gained negative publicity due to unethical human and labor practices adopted by Apple’s suppliers. Apple is doing excellent in all marketing process. The company needs to focus on how to attract more consumers, and how to retain positive image of the Apple (Valor, 2005).
Two actions that company can perform in order to gain competitive advantage are: development and execution of social welfare programs in developing countries; and development of technology that can contributes towards social development. Companies such as Nike, Coca-Cola, PepsiCo, Unilever, P&G, and Nestle are benefiting by implementing social welfare programs in developing countries (Madlani, 2014). These companies received support from stakeholders, community, and government bodies because they are giving back to the community. Consumers also prefer to buy their products because they feel that they are indirectly contributing to the welfare of society. Apple can develop technology that can reduce the consumption of natural resources, or something that can support people in fighting deceases or delivering education. Company like Google developed efficient system that reduced the consumption of power significantly.
After analyzing CSR strategy and marketing strategy of Apple, it is good to conclude that Apple has far way to go when it comes to CSR. Since beginning company’s strategies were focuses only on customers. Now it’s time for Apple to think about the community and society in which company operates. Company should design and implement effective CSR strategy in order to gain competitive advantages.
Carroll, A., and Buchholtz, A. (2012). Business and Society: Ethics, Sustainability, and Stakeholder Management. Stamford, CT: Cengage Learning.
Madlani, M. (2014). A Study on Corporate Social Responsibility: with Special Reference to HUL. International Monthly Refereed Journal Of Research in Management & Technology, 3(4).
McWilliams, A., & Siegel, D. (2001). Corporate Social Responsibility: a Theory of the Firm Perspective. Academy of Manageent Review, 26(1), 117-127.
Mohr, L.A. and Webb, D.J. (2005). The effects of corporate social responsibility and price on consumer responses. Journal of Consumer Affairs, 39(1), 121–147.
Nova, S., and Shapiro, I. (2013, February 12). Apple’s self-reporting on suppliers’ labor practices shows violations remain common. Retrieved from Economic Policy Institute: http://www.epi.org/publication/apples-reporting-suppliers-labor-practices/
Supplier Responsibility. (2013). Retrieved from Apple: http://www.apple.com/supplier-responsibility
Valor, C. (2005). Corporate social responsibility and corporate citizenship: towards corporate accountability. Business and Society Review, 110(2), 191–212