Is Apple an Ethical Organization - Case Study Example

Is Apple an ethical organization? Name Professor Institution Course Date Is Apple an ethical organization? Background of the report The paper focuses on the business ethics and corporate social responsibility concepts In Apple Inc. Apple, an American multinational founded in 1977, specializes in the production of software, and computers, portable digital music players, smart phones networking solutions, and third-party digital content (nytimes.com). Apple has time after time been regarded as the Globe’s Most Admired Corporation with good working policies. Even though Apple is a leading technology manufacturer it has faced numerous ethical issues in the recent years. These concerns can have a profound impact on the corporation’s future effectiveness and Apple’s outstanding reputation can easily be dented by serious misbehavior or a failure to tackle risks properly. Following its recent reputation that company developed code of ethics that states “Apple conducts business ethically, honestly, and in full adherence with all laws and regulations, this applies to every business decision in every area of the company worldwide” (Apple Inc., 2010). However, many still ask the question ‘Is Apple an ethical organization? To answer this question the paper looks into the operations of the company in various markets. Introduction In the years, the technology giant company, Apple has received the reputation for making excellent products and for its capability to generate a massive amount of publicity regarding its new product. Stone (2009) argues that this achievement was, partly, due to the air of secrecy concerning Apple and its brands manufactured by the organization by keeping a mask of secrecy. In addition, that mystery has turned out to be one of the major components of Apple's organizational culture. Opponents contend that this facet of Apple's culture also bears a dark side. The company imposed ruthless sanctions on staff that defied rules by sharing the company information. Owing to its passion with secrecy, Apple took legal action against online journalists, bloggers, and former staff for revealing confidential information concerning upcoming products. This has been seen as ethical behavior various critics citing violating freedom of expression on members of the public. This paper analyses various unethical allegations that have been raised against Apple Inc. these reports are normally found on media and business press (Apple Inc., 2010). They allege that Apple have raised their prices in Australia than other markets, unfairly dominating the market share, misappropriate competitors’ intellectual property rights, condones harsh working conditions faced by their suppliers and also supports authoring software that confines freelance authoring and distribution rights. Charging higher price in Australian market than in other markets ABCNEWS (2013) reported that Apple Company had raised charges on its products in the Australian market as compared to other markets. This claim was back by the inquiry that heard of cases where an Arctic Monkeys album on iTunes was costing $17.99 in Australia that was equivalent to $13 in other markets, and Toy Story (movie) was costing $24.99 in Australia as compared to $10 ion other markets. These kind of stories raised serious concerns on the business practices of Apple. This can be regarded as price discrimination against Australian consumers. When prices are hiked on goods that consumers value, it makes them tighten their budgets. High price charges also deny consumers to live a comfortable they would want because it forces to review and tighten their budgets. This unethical issue of price discrimination was even questioned by the parliament which later formed an inquiry to try and rescue the Australian consumer. However, Apple representatives, together with fellow technology companies Adobe and Microsoft, showed up before a national parliamentary committee inquiry on pricing, with concentration in Australia (Apple Inc., 2010). During the hearing Apple's Tony King came out in defense of his company on prices in Australia. Giving reasons for the price decision king said "Price decisions normally go well further than just looking at a currency exchange rate". He challenged that "for instance, Apple considered variances between states in product costs, freight costs, levies, sales taxes at the local level, channel economics, import duties, local laws concerning advertised prices and competition" (Apple Inc., 2010). In another ethical concern, Apple was bogged down in controversy concerning the online sales in the European Union in which as a one market, consumers were free to buy goods and services from all union member state. However, iTunes Stores compelled customers and other music consumers to iTunes-only websites by confining content acquisitions to the state from where the consumers' details of payment came from, which also compelled users in different states to pay higher costs. Unfairly domination the market shares by Apple Inc. It is argued Apple was using wrong and unlawful tactics to dominate get quick sales and dominate the market share. These tactics range from favoritism, court cases, making low quality products, reducing prices, giving out misleading warranties, concealing information about their products and other uncompetitively advantaged (Stone, 2009). Apple's portable gadgets, whether they are based iOS such as iPhone, iPad and iPod Touch or not based on iOS such as iPod Classic, iPod Shuffle or iPod Nano have been criticized for being protected into iTunes therefore creating monopoly for an iTunes Store. Owing to this, the late CEO Steve Jobs was told by the court to attend a hearing concerning antitrust infringements particularly with iTunes and iPods (Thompson, 2007). Apple was further criticized for price reductions just after releasing the iphone particularly after the cost of iPhone was slashed by $200 only two months after its launch. This rapid fall in price led to several criticisms to Apple. Apple rectified the criticisms by providing $100 store credit to iPhone clients who had earlier purchased their iPhones from AT&T or Apple (Paul, 2007). This occurred after the done had already been done. Apple has been deliberately and strongly controlling information concerning product release, while releasing misinformation in an attempt to discover leakers and make the media uncertain about Apple Inc.'s present developments (Appleinsider, 2010). Thus Apple's techniques lead to more excitement in regard product release. In some situations, Apple intentionally leaks information about products for instance, Apple’s Ipad leaked to the public so as to determine potential feasibility of that particular products. It is ethical for a company to keep their customers normally informed about their products and product release. Misinforming the public and the customers normally amount to making wrong decisions. According to Metz, (2009), Apple has been previously condemned for not willingness to respect its warranties and its associated fondness for providing reasons for doing so. Singletary (2011) reports that in 2011 the Italian Antitrust Authority slapped Apple with a fine amounting to nearly $1.2m for failing to appropriately inform consumers of their lawful right; arranty service of two year under Consumer Code of Italy. Italian agency state that Apple simply revealed the company standard warranty of one year and went ahead to sell buyers AppleCare for one extra year without abiding to the law. Ethical issues of Intellectual property rights in Apple Company Theft of Intellectual property is a major issue that Apple, has been charged with in the recent past. A notable situation was Apple’s court case against Microsoft following Apple licensing technology to Microsoft (Orlowski, 2006). It may look as is Apple Inc. is the aggrieved company but this was not the case. When Microsoft launched Windows 2.0, Apple alleged that the licensing contract was just meant for Windows 1.0 and that Windows, a product of Microsoft portrayed the “look and feel” of Macintosh graphical user interface which was a product of Apple Inc. Orlowski (2006), assert that the courts held that indeed Microsoft did not violate copyright law or any licensing contract just showing similarity with Macintosh systems. However, the Windows had some similarities but did not have the “look and feel” Macintosh user interface. Other court cases entailed more serious ethical concerns on the part of Apple. One lawsuit that involved Apple was the application of the domain name (iTunes.co.uk). Ben Cohen had already registered this domain name in 2000, and used the domain name to re-direct end users to other websites. Cohen ultimately applied the domain to re-direct end users to Napster site, one of the direct rivals of Apple. Apple tried to acquire the domain from Cohen; however when negotiations hit the rock the company pleaded to registry Nominet, a UK company. Normally, when a person becomes the first to register the domain name he or she receives the rights to own that name. However, the arbitrator in the lawsuit withheld that Cohen violated registration rights and took unjust benefit of Apple. Apple prevailed over Cohen to utilize the domain name that resulted to criticisms that Apple Inc. was being preferred at the cost of younger companies. According to Reuters (2007), in 2007, Apple experienced another trademark court case from Cisco Systems. Cisco Systems alleged that Apple had breached on its iPhone brand name. Since 2000, the trademark had been owned by Cisco. Both the two companies agreed to negotiate and come up with the solution on who to use the Trademark, but apparently Apple walked out of the negotiation. Cisco claimed that the organization then opened a front company called Ocean Telecom Services, and then filed for the iPhone brand name in the United States. A section of stakeholders observed Apple’s activities as a deceiving way to avoid negotiation process. The court case ended with the two companies agreeing to apply the iPhone trademark. However, Apple’s activities in this circumstance remain controversial. During World Consumer Rights Day in March 15, 2103 CNTV, a national TV aired a program that entails Consumer Rights where they criticized Apple warranty concerns in China. In their report they said, iPhone normally utilize old back cover when changing broken device, particularly iphone in China. CNTV went ahead to say the warranty duration for changed products like Macintosh and iPad is just 90 days which are not in accordance with Chinese laws entailing warranties (CNTV, 2013). Apples condones harsh working conditions faced by their suppliers Lots of Apple’s product elements are produced in nations experiencing low labor charges. The possibility for misbehavior is high owing to varying labor standards and low level of direct supervision. Consequently, Apple makes all of its supplier’s mark, its “Supplier Code of Conduct” and carries out company audits to make sure conformity (Apple, 2011). Apple has been very harsh with their policy that influences the business culture of its suppliers. One of such polices is report on Supplier Responsibility Progress. Apple has been accused of ruthlessly dealing with the suppliers; holding suppliers liable for their omissions and errors in their relationship. The statement from the company also confirms this, where Apple affirmed that "The company (Apple) procurement decisions considers a company’s performance on social responsibility, together with elements like quality, timely delivery and cost”. They even went further by threatening their suppliers by stating that “When performance on social responsibility constantly fails to satisfy Apple demands, we terminate relationship" (Musgrove, 2006). In 2009 and 2010, Foxconn company, Apple manufacturing partner supplying iPads, iPhones and other computing devices came under criticism by the press, where one source described the working conditions in the company as "white collar prison" (Carlson, 2010). It was also reported that in 2009 where Foxconn security guards were recorded in a video beating workers. In 2010, four employees committed suicide in the same month in the same plant. In reaction to these incidents workers were compelled by Apple to sign a lawfully binding agreement ensuring that they would not commit suicide tin future. However, it was clarified how employees’ failure to put up with by the agreements and terms would be sanctioned. One of the failures of the company was found out to be the root cause of these suicide cases. Instead, they went further to intimidate employees with new terms of employment and even forcing them to sign. This kind of act not only shows that the company knew what caused the suicide causes which were harsh working conditions but tolerated it. The Apple supplier company, Foxconn has been reported to have forced the students to work in the plant’s production department against their will. The student was forced to work in production of iphone 5 while the schools claimed it was an internship (Shanghai daily, 2012). They went further to claim that the student would learn a lot and be left whenever they wanted to leave, which was not the case. They spend two months being forced to assembly Apple products including iphone 5. Another ethical concern was raised in August 2008, when one of the Apple suppliers, Suzhou Company of Wintek, China compelled workers to change alcohol with n-hexane, i.e. normal hexane, in cleaning touch screen manufactured (Reuters, 2011). This chemical offers better efficiency compared to alcohol, however it also has a powerful unpleasant effect: if individuals are exposed to it for a longer time, the substance attacks their nerves. Conclusion In a simple review, we can conclude that Apple is not ethical enough in the way they are dealing with both their customers and competitors. However, have also been involved in ethical dilemmas but that does not make the company stray away from its code of ethics. Apple looks optimistic regarding its future. The corporation has created a cult following amongst its consumers who are strongly dependable to its products. Therefore, as a company their have responsibilities to ensure that that the consumers are provided with the right information and provided with higher quality products that is worth the value of their money. Lastly, Apple must ensure that it promotes a fairly competitive environment that is conducive for other businesses in the same industry. References Apple Inc. 2010, Business Conduct: The way we do business worldwide, viewed 15th May 2013 from http://files.shareholder.com/downloads/AAPL/1283312876x0x443008/5f38b1e6-2f9c- 4518-b691-13a29ac90501/business_conduct_policy.pdf(accessed June 7, 2011) Apple, Inc. 2011, Apple Supplier Responsibility 2011 Progress Report, Apple, Inc. ABCNEWS, 2013, Apple, Microsoft Grilled Over high prices, viewed 15th May 2013 from http://www.abc.net.au/news/2013-03-22/apple-microsoft-grilled-over-high- prices/4587900 Appleinsider Staff 2010, Former Apple marketing manager describes company's 'controlled leaks', Appleinsider, viewed 15th May 2013 from http://appleinsider.com/articles/10/01/06/former_apple_marketing_manager_describes_c ompanys_controlled_leaks.html Carlson, N 2010, What It's Like To Work In China's Gadget Sweatshops Where Your iPhones And iPads Are Made, Business Insider. CNTV 2013, Apple China warranty policy is different from foreign countries, cntv.cn. Metz, C 2009, Apple voids warranties over cigarette smoke; users say No repairs for 'biohazard' Macs, The Register. Musgrove, M 2006, Sweatshop Conditions at IPod Factory Reported, The Washington Post. Orlowski, A 2006, Apple sues itself in the foot (again), The Register. Paul, M 2007, Iphones 100 apple store credit program goes live, viewed 15th May 2013 from http://www.engadget.com/2007/09/14/iphones-100-apple-store-credit-program-goes-live/ Singletary, M 2011, "Italy fines Apple $1.2M", The Washington Post. Thompson, B 2007, Time for Apple to face the music? BBC News. Stone, B 2009, "Apple’s Obsession With Secrecy Grows Stronger, New York Times. Shanghaidaily 2012, Students say they are forced to work on new iPhone 5, shanghaidaily.com, viewed 15th May 2013 from http://www.shanghaidaily.com/nsp/National/2012/09/06/Students%2Bsay%2Bthey%2Ba re%2Bforced%2Bto%2Bwork%2Bon%2Bnew%2BiPhone%2B5/ Reuters 2011, Apple Wintek, viewed 15th May 2013 from http://www.reuters.com/article/2011/02/25/us-apple-wintek-idUSTRE71O2B420110225 Reuters 2007, Apple, Cisco agree both can use iPhone name,” Reuters, February 22, viewed 15th May 2013 from http://www.reuters.com/article/2007/02/22/us-applecisco- idUSWEN460920070222 Read More