Corporate Social Responsibility and Business Ethics at Apple - Case Study Example

Apple has achieved great success in the last 15 years with a market capitalization of over $500 billion which has made it the world’s most valuable and profitable business. It has achieved excellence through use of latest technology and innovative products making it much profitable than its competitors. However, it has been questionable whether the profits are made ethically (Apple Inc, 2012). In the recent past Apple.inc has been criticized for behaving unethically and not demonstrating true corporate social responsibility on their part. Popular media and business release had found Apple behavior much inclined towards unethical means. The company has been continuously criticized for issues like taking unfair advantages of its market share, child labor, high prices, low pay, environmental damages, misappropriating the IPR of competitor companies etc. Further as per the latest release of Forbes it is surprising to see Apple not in the chart of world most ethical global companies. Maintaining ethical environment has always been a serious issue for the company. It has been much argued that the company has much changed to follow strict ethical behavior in command of Tim Cook after the death of the last CEO Steve Jobs. The company has recently drafted a code of conduct that applies to all its operations, special policies has been designed to follow corporate responsibility, suppliers code of conduct has been designed and factory audits are conducted to see its compliance. Thus, steps have been taken to inculcate an ethical environment but still the company has been lagging to make the company workplace an ethical place to further ensure an ethical environment (Pratap, Radhakrishnan & Dutta, 2012). Much has been argued about Apple being an ethical organisation or not, however facts have shown that the company has been following Unethical means to achieve its high profit figures. Some serious issues on which the company has been criticized for the same are as under FOXCONN INCIDENT: Apple outsourced its manufacturing unit and use Foxconn factories to produce their products to reduce cost. However the environmental conditions in these factories especially in China is much criticized as 12 employees had committed suicide owing to unethical means in the working environment as reported. In 2009, Foxconn guards had been videotaped beating employees. In response to this the company has made its employees to sign legal bindings on them to not commit suicides (Moore, 2010). However, it is still a mystery that how an employee will be sanctioned if he does not follows the same. Further many students were forced to work in the factory against their will for production of iPhone5 for which the schools as a means of defensive strategy reported the same as internship for students to become graduates. LABOR PRACTICES: An article published in “The Mail on Sunday” alleged that sweatshop conditions existed in Chinese factories of Apple where over 200000 employees were working for more than 60 hours of labor per week at $100 per month who were required to live on the premises of the company and had to swipe off nearly half their earnings on rent and basic living in the company. Labor laws were strictly not followed and the company managed to keep the cries of the workers unheard. Further, in 2010 workers in China planned to sue the company for poisonous cleaners of which the workers were not educated and not informed about the possible occupational illness that could occur to them (Global Compliance Workplace Network, 2012). MEDIA RELATIONS: Apple has continuously been criticized for making tight controls over its information regarding its new product launches in order to create more hype in the market for its products demand. In many cases it has found that Apple has deliberately leaked information in the public via media to check on the products viability in the market which is a serious unethical means on part of the company (Apple Inc, 2012). Apple has also been criticized for making the media unaware of its current developments and further misguiding the media to know about its competitor development strategies. CONTROVERSY ON GOOGLE VOICE: Apple was criticized by its users for preventing iPhone users for using the Google voice application as it disabled the feature from its phones justifying that the application altered the function internally which was later proved wrong and the feature was made available from November, 2010 thus showing unethical behavior of the company towards its uses. I-TUNES CONTROVERSY: Apple Inc. was caught in online sales of music in the European Union where consumers could purchase from any member state. Apple however, forced consumer to i-tune sites only which forced consumer in some countries to pay higher prices (Global Compliance Workplace Network, 2012). This was clearly an unethical practice by the Apple who even after being caught for the same somehow was able to prove itself clear in the eyes of law. HIGH PRICES: Apple in many circumstances had taken unfair advantage of their dominant market share and created more of monopolistic market environment. It had deliberately in spite of low production cost due to its outsourced manufacturing units in China charged higher prices for its products specially in Australia and Asian countries just to higher its profit figures without considering the ethical norms of best prices for its products had looted the general customers by making a lower supply of its products as against the demand to higher its prices and book higher profits (Lee, 2011). WARRANTY CLAIMS: Apple was recently fined huge fund by the Italian Antitrust Authority for misleading its customers of their legal rights to two years of warranty service under the Italian Consumer code. Apple instead just offered one year of warranty service in Italy and offered to sale Apple Care for additional one year. This strategy of Apple was highly criticized and was very unethical on the part of company. It was considered to be pure profit maximization strategy at the cost of practicing unethical behavior in the working environment of the company. Recently in China the company was again found to unethical means as it used old back covers in its mobile phones when it came for repairing as broken iPhones in the company’s service centre. Further it also claimed that the warranty period of changed period is just 90 days. It was lately in 2013 that the new CEO of the company Tim Cook apologized for the same and changed the policy in China. SECRECY: Apple has always maintained an obsession with secrecy. One can in most of the magazines and journals read that the Apple Officials had refused to make any comment and things had been kept secret. It is owing to this secrecy policy of the company that invites unethical behavior as without correct and timely information it becomes a difficult task for its customers, investors, employees and other activists to know whether the company has been engaged in unethical behavior or not, to know whether the company has been spewing pollutants , abusing workers, using dangerous chemicals etc or being involved in any activity which is against the corporate social responsibility and ethical norms of the company (Karlgaard, 2012). PLANNED OBSOLESCENCE: Apple products can be seen anywhere you go, it has been successfully able to make its brand image and it products do define status symbol in the society. Early Apple has designed i-Pod and then gradually added more features to the same to bring new versions of the same. However, as more generations of the i-Pods emerged one could sense that the company had deliberately planned obsolescence to make the older sold i-Pods not being able to be updated with the latest technology (Apple Inc, 2012). “Planned Obsolescence is when a company designs its products with an expiration date so that the existing and potential users buy the newer variants of the same products in anticipation of advanced features.” This was much criticized by the consumer as an unethical behavior on part of a high profit making company just to boost its profit figures at the pockets of its existing and potential users. CHILD LABOR: Child labor is considered a serious crime in most nations of the world globally with strict fines and imprisonment punishments to the accused. Internal audit of Apple has revealed that 106 children’s were employed at 11 different factories making Apple products. A number of them were employed using forged identity papers. Children are usually employed to carry the manual jobs as they are usually paid less and hence help in lowering the cost of production and increasing the profit margins (Apple, 2012). Apple on the same note took serious steps to abide by the Child Labor Laws and paid huge fines, however, the same was only highlighted when the company was caught for Child Labor which certainly confirms the unethical environment in the workplace of Apple.inc and its constant involvement in unethical issues related to different matters in different areas of its operation. It is to be noted that the above list is not an exhaustive list, there are many more such issues which had lately shown signs of unethical environment in the Apple’s workplace. Apple has been found entertaining unethical means in many of its manufacturing units for which the last CEO Steve Jobs has addressed it as a global problem without actually denying the same problem in his own company and trying to eliminate the same. Apple has been criticized by its rivals for misappropriating the IPR (Intellectual Property Rights) of its rivals and have adhere to tax avoidance schemes by finding loopholes in the tax structure of the economy both domestically and internationally which has given guidance and support to other small companies in the same field to avoid tax and following unethical means to achieve the same (Apple, 2012). Apple has been found to follow unethical means in issues related environmental destruction claims, data security, quality control and customer service related issues, price reductions etc. It is to be noted that a company in any law is a legal fiction which is managed by a group of individuals and their ethical standards (Moore, 2012). Apple has never in the recent past actually given importance to the ethical standards of its management employees owing to which the organisation has been involved in more unethical behavior than setting up an ethical example for others. Tim Cook has recently claimed that the company has changed drastically under his guidance ever since the death of the last CEO of the company (Steve Jobs). It has claimed that the organisation has become much more ethical which is much doubted because of the following facts. Since a company is managed by employees working in the organisation and ethical behavior in an organisation depends on individual ethics and only a charge taken by a new CEO cannot in any sense completely change the individual ethics of the employees working in the same since the same old employees are continuing their jobs in the organisation (Vascellaro, 2012). Further, it is to be noted that during the time of Steve Jobs the last CEO of the company, it was Tim Cook who was in charge of the supply chain and the conditions which existed during the Foxconn and other contractors where the responsibility of Tim Cook who failed to build on corporate responsibility and was responsible for the unethical issues pertaining at that time. Supplier code of conduct has been designed by the organisation and the same is enforced vigorously on the suppliers but an internal audit system reveals that the supplier code of conduct is more inclined towards profit booking than maintaining ethical norms and ethical code of conduct which itself provides space and invites unethical means to boost up profits and sales of the organisation (Karlgaard, 2012). It is to be noted that ethics in a workplace cannot be developed or inculcated in a day, it requires time and proper training and guidance from the start. Apple.inc has always been criticized for its unethical means and running away from its corporate social responsibilities (Moore, 2010). Apple is one of the most valuable globally organisation and it definitely requires to set an example for others to follow rather than using unethical means and encouraging others small companies to follow the same. Apple has been climbing up the ladder every year in terms of its profit booking and expansion strategies, however owing to so many circumstances in the past one can conclude that Apple in no means can be considered an ethical organisation to work for. Recently under the management of Tim Cook the company has taken many steps to make the organisation an ethical workplace like it became the first electronic company to be admitted to Fair Labor Association and also made changes in its code of ethics (Karlgaard, 2012). However, the organisation still is far behind to make the organisation an ethical environment to work for. It is important for the organisation to hire ethical leaders in the company who can influence their subordinates or followers towards ethical means. Further the organisation should ensure that its suppliers allow the auditors a complete access to the documents, factories and records in order to find any instances of unethical issues and take measures to correct the same on priority basis (Apple, 2012). The company should also ensure security and make rewards scheme for the whistle blowers in order to promote corporate social responsibility. Thus in a nutshell it can be concluded that though the organisation in today’s circumstances cannot be regarded as ethical organisation or workplace for an individual to work for, the organisation though lately has understood the importance of ethics in an organisational environment and has recently taken steps to inculcate ethics in its working style and focus on its corporate social responsibility rather than just concentrating on booking higher profits. References Apple Inc. (2012). Supplier Responsibility Progress Report. Supplier Responsibility. Retrieved on May 21, 2013 from http://images.apple.com/supplierresponsibility/pdf/Apple_SR_2012_Progress_Report.pdf Apple (2012). Code of Conduct. Labor and Human Rights. Supplier Responsibility: Retrieved on May 21, 2013 from http://www.apple.com/supplierresponsibility/code-of-conduct/labor-and-human-rights.html Apple Inc. (2012). “Buy iPhone”. Retrieved on May 21, 2013 from http://store.apple.com/us/browse/home/shop_iphone/family/iphone/iphone4s Global Compliance Workplace Network. 2012. China: Overtime Work– Mandatory Rules and Internal System. Retrieved on May 21, 2013 from http://www.gwcnetwork.com/index.php?option=com_content&task=view&id=140&Itemid=66 Karlgaard, R. (2012). In Defense of Apple's China Plants. The Wall Street Journal. A13. Print. Lee, A. (2011). Apple Manufacturer Foxconn Makes Employees Sign “No Suicide” Pact. The Huffington Post. Retrieved on May 21, 2013 from http://www.huffingtonpost.com/2011/05/06/apple-foxconn-suicide-pact_n_858504.html Moore, M. (2010). Inside Foxconn’s Suicide Factory, The Telegraph, May 27, 2010. Retrieved on May 21, 2013 from http://www.telegraph.co.uk/finance/china-business/7773011/A-look-inside-the-Foxconn-suicide-factory.html Moore, M. (2012) Mass suicide Protest at Apple manufacturer Foxconn factory. The Telegraph. Retrieved on May 21, 2013 from http://www.telegraph.co.uk/news/worldnews/asia/china/9006988/Mass-suicide-protest-at-Apple-manufacturer-Foxconn-factory.html Pratap, S., Radhakrishnan, V., & Dutta, M. (2012). Foxconn Workers Speak: We Are Treated Worse Than Machines. Asian Labour Update 78: p 32-36.Web. http://www.amrc.org.hk/system/files/ALU%2078%20v2.pdf#page=15 Vascellaro, J.E. (2012). Audit Faults Apple Supplier. The Wall Street Journal. pp. B1-B2. Print. Read More