Ethical Issues faced by Apple

Table of Contents

• Introduction
• Company Profile
• Ethical Issues facing Apple
• Evaluation
• Recommendations
• References

Introduction

This report focuses on the ethical issues and human rights violations the company Apple Computers Inc. was accused of for the inhuman treatment of the workers of its primary contractor Foxconn in China which is also a supplier to many well-known companies like Dell, Nokia, Nintendo etc. The report contains a brief introduction to apple computers Inc., and in detail the problems faced by the employees of the company. This report aims to evaluate the problem faced using the humanitarian theory and suggest various measures to tackle the problem with the help of CSR theory.

For more information about Apple and how they operate as a business, take a look at our Apple PESTEL, SWOT, and Porter's 5 Forces Analysis.

Company Profile

Apple Computer Inc. is a multinational technology company founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on January 3, 1977 (Apple Inc (AAPL.O) Company Profile Reuters.com). It is headquartered in Cupertino, California, USA. It designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players. The company also sells a variety of related software, services, accessories, networking solutions, and third-party digital content and applications. Some of the company's products are iPhone, iPod, macOS, watchOs, iCloud, Apple Pay etc. The company sells its digital content through its exclusive applications called App store, iTunes store, Mac app store etc. It also sells its products through its exclusive retails stores, online and through third-party cellular network carriers (Apple Inc (AAPL.O) Company Profile Reuters.com). In terms of revenue, it is the second largest company in the information technology field. The company also has one of the most loyal consumer bases in the technology field. The company's main rivals are Samsung, Huawei, and Xiaomi who put pressure on the company to constantly innovate its products by following an aggressive pricing strategy (Apple Inc (AAPL.O) Company Profile Reuters.com).

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The company operates worldwide which can be divided into five geographical segments namely the Americas, Europe, Great China, Japan and the Asia Pacific. Apple appointed Isabel Ge Mahe as the first-ever vice president and managing director of Apple in Greater China and no other regional markets have a dedicated vice president or regional manager because the company's revenue peaked in China at 29% in 2015 (Etzioni, 2018). The company also plans to open a Chinese data center and four new Chinese R&D centers (Etzioni, 2018). Apple also plans on investing $1 billion in Chinese ridesharing service Didi Chuxing all to capture the Chinese market. The company also has around 12,000 employees in China to meet the firm's goals in China (Etzioni, 2018). The company's primary revenue is generated by the iPhone and iPad product lines which accounted for 70% of the total revenues in the fiscal year 2017 (Nobahar, 2015). The company reported revenues of US$229,234 million for the fiscal year 2017, an increase of 6.3% over the fiscal year 2016 (Nobahar, 2015). In the fiscal year 2017, the company's operating margin was 26.8%, compared to an operating margin of 27.8% in the fiscal year 2016 (Nobahar, 2015). In the fiscal year 2017, the company recorded a net margin of 21.1%, compared to a net margin of 21.2% in the fiscal year 2016 (Nobahar, 2015).

Some of the Ethical Issues facing Apple

Klowden (2006) stated that since 2006, Apple has come under heavy criticism for obtaining components from producers that do not have a good reputation, when it comes to employment conditions. In that year, the first reactions were voiced in the media with respect to the conditions in which Apple's iPods were being created. It was affirmed that the Apple workers were gaining as minor as US$50 per month, as they were working 15 hrs. per day.

(Enderle, 2010) Apple is under substantial pressure to locate the most minimal cost suppliers and normally can look all around to discover them. While they frequently have rules for things, for example, green practices, gift, and kid work, there will, in general, be few as to authorization. Organizations will, in general, realize who abuses these rules, yet regularly embrace a "don't ask, don't tell" position with these providers to streamline edges and guarantee benefits. The issue isn't that these practices go on, however, that their reality and the related dangers aren't appropriately evaluated against the investment funds that these minimal effort providers give. To put it plainly, while the advantages, to a great extent money related, of working with these providers surely know, the dangers aren't - and this prompts unbalanced choices that don't consider these dangers.

On 23 January, the body of the 19-year-old Ma Xiangqian was found before his high-rise dormitory of the Foxconn plant in Guanlan. Police agents presumed that he had fallen from a high floor. Ma had worked 11-hour medium-term shifts, seven evenings every week, producing plastic and metal amid vapor and residue, until the point that he was downgraded to cleaning toilets after a debate with his manager. His wage slip demonstrated that he worked 286 h in the prior month he kicked the bucket, including 112 h of extra time, multiple times as far as possible in China (Barboza 2010).

Rundle (2011) stated that, in May 2011, an explosion at Foxconn in Chengdu caused three deaths and left many harmed. The Chinese media revealed the impact was caused by the residue that had been collected in the ventilation framework, being ignited off by a defective wire. In December 2011, another explosion happened at RiTeng Computer Accessory, a backup plant of Pegatron Corp, another of Apple's Chinese providers, harming 61 laborers. (D. Chan, 2010) stated, that in the two months previously, before the first explosion happened, a non-profit association called 'SACOM' spoke with the Foxconn laborers, and the workers complained that the cleaning department was filled with aluminum dust and had poor ventilation.

Richburg (2010) states that, the long-running Apple discussion got ugly in mid-2010 when work turmoil shook up the south of China as mass strikes for wage increases and better working conditions. Three-dozen strikes occurred at the plants of Foxconn, Honda, Hyundai, and different multinationals.

Campbell (2006) states that the social and environmental issues that companies should address can without much of a stretch, can be interpreted as including for all intents and purposes everything''. Without a doubt, existing writing depicts activities managing decent variety, human rights, security, philanthropy, network, and environment.

(Strain, 2012) stated that eco-activists are irritated at Apple's undeserved successful halo. Despite the fact that it has enhanced a great deal over the most recent couple of years, the organization still clusters at the base of its industry in the rankings of ecological gatherings like Climate-Counts; it didn't make Newsweek's yearly rundown of "100 Greenest Companies in America" until 2010, when it debuted somewhere in the range of 60 spots behind Dell, HP, IBM, and Intel. Greenpeace focused on Apple in a purchaser crusade in 2006. Socially capable speculators, for example, the Interfaith Center on Corporate Responsibility and As You Sow think of it as a slow-poke in numerous regions, including reusing projects and revelation of ecological objectives. The organization has declined to join Ceres, a major alliance of organizations that centers on manageability, or the Eco-Patent Commons, an association framed in 2008 by IBM, Nokia, Sony, and other tech firms to share ecological thoughts.

DiMaggio and Powell (1983) one of the unmistakable conceptions of the philanthropic theory is the possibility that companies working in a similar region are probably going to embrace practically identical hierarchical structures and practices as the associations are presented to comparative social weights and partner desires.

Apple began a provider duty program in 2006, when it built up its Supplier Code of Conduct. From that point forward the organization distributes a provider duty report yearly, in which it makes its review findings open. Apple states that it is ‘‘…committed to ensuring that working conditions in our supply chain are safe, workers are treated with respect and dignity, and manufacturing processes are environmentally responsible’’ (Apple 2010).

At the point when the 'Violation of the Code of Conduct' is triggered, Apple demands that the executing organization should tend to these violations within 90 days. Should a supplier not meet Apple's requests, the business relationship is ended. Apple (2011)

An Apple representative was cited as saying: ''This is an intensive review, which incorporates employee working and living conditions, meetings of workers and supervisors, consistency with additional time and wage controls, and different territories as important to guarantee adherence to Apple's provider set of accepted rules. Apple's provider set of principles sets the bar higher than acknowledged industry measures and we consider charges of resistance important''. Hessendahl (2006)

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Davis(2013) While the Apple company via supply chains has brought work and financial development to many developing economies, especially in Asia, it is likewise connected with exploitative business relations, environmental flaws, and consistent ethical difficulties. Also, the effect of the impact of a lot of assembling and administrations work from the progressed mechanical nations to the developing economies at the fringe has regularly implied declining wages and conditions, and progressively business uncertainty for the specialists of the propelled nations (Kalleberg, 2009).

Bartley (2007) However, there have been numerous of campaigns to enhance laborer’s rights and business conditions in the plants working inside Apple's global value supply chains in the rising economies, and global partnerships have been helped to remember their obligations and frequently joined to corporate and ecological duty standards, there, remains across the board misuses, and it gives the idea that there is significant institutional disappointment. Roh et al. (2014)state that, the transaction between worldwide economic powers and local situations represents various difficulties for monetary and work security, and for business responsibility, straightforwardness and morality.

Greenpeace (2007) Organizations are knowledgeable at portraying themselves as socially dependable while hushing commentators and appealing to customers. Consumer and employee control frequently should be outfit and intervened by outsiders, for example, NGOs, sorted out work and intrigue gatherings to have any effect.

Indvik (2011) in 2010, Apple turned into the most significant brand, with an 84 % hop in brand an incentive to $153.3 billion. By March 2015 Apple's income rose to $212.2 billion, while in February 2015 Apple achieved a market capitalization of $770 billion, about twofold that of ExxonMobil, Google and Microsoft (alternate organizations with the biggest market capitalization) (Platt and Badkar 2015).

ElmerDeWitt (2011) New component innovations are costly to make when first developed and fabricating industrial facilities to make these in mass amounts is costlier still, while edges are little, and psychologist as additional items move toward becoming commoditized. All things considered, it is hard for EMS organizations to raise speculation cash-flow to take care of their expenses, yet Apple pays towards the expenses of development in return for elite rights to yield for a period, with a limited rate a brief time later.

Worsall (2014)Meanwhile Apple drives down provider quotes, including late gauges for materials, and in addition work costs: in 2012, the program ABC Nightline found that get together specialists at Foxconn, Apple's biggest provider, made $1.78 60 minutes (Arthur 2012). Likewise, Apple as of late looked for more authority over the worldwide hardware store network by ''binge hiring'' several architects and inventory network chiefs, to quicken the arrival of latest items (Tate 2014).

(Winstudent 2016) Apple additionally faces the danger of offering their shares, because they face claims from different contenders guaranteed Company licensed innovation burglary. What's more, despite the fact that Apple's forceful position to assist it with protecting their licensed innovation, items and conceivable mystery hold Unfavorable also. Google, for instance, there is a progressively open source approach. It has demonstrated extraordinary for the open-source development, pushed an open programming code and programming support in a request to get more contribution from an outside source. In spite of the fact that this receptiveness expanded the danger of protected innovation burglary, it likewise enables advancement to happen all the more rapidly, because of the extra Cooperation. Be that as it may, Apple has found a way to wind up a green organization, for example, lessening the effect on the condition its offices. Be that as it may, the organization recognizes that a large portion of the discharges from its item. While 3% of the office, 97% of the existing cycle of its items. On account of Apple's prosperity relies upon ceaseless advancement and presentation of new items, Impact of its items on nature is a significant issue.

Evaluation

From the above-mentioned cases, the case of Foxconn the primary contractor of Apple got more attention in the media because of the harsh conditions faced by the employees working for the contractor. The problem is evaluated based on the Utilitarian theory below:

According to the Utilitarian theory, the problem of the employees working overtime and living in harsh conditions can be justified for the satisfaction of all the consumers of Apple products which account for around 11% (Ryan Clement, 2016) of the total consumer electronic consumers in the world. According to the theory the higher number of people are satisfied then the problem faced by a smaller group of people can be ignored and in this case, the suicides of the employees can be ignored as the number of employees working for Apple in China is lower than the total number of Apple consumers. So, the accusations of Apple and Foxconn for ill-treatment of the workforce can be ignored according to the Utilitarian theory.

Recommendation

According to (Guo et al., 2012) the author disagrees with the outlook of utilitarian theory where more preference is provided based on the most overall happiness or satisfaction. The disadvantage of this strategy is that Change in variable condition to an individual may change the situation and lead to change in the original decision. The theory mainly focus the action which provides satisfaction to most number of people i.e. customers as they receive phones at cheap rates and as they are the first stakeholder to the organization they satisfied the motive of the business which is to earn profit and not the employees which are attempting to suicides because of low pay, labor abuse, poor facilities, violation of labor laws etc. this theory is biased and against the law and unfair to employees who are responsible for their duties. The author based on Carroll's CSR theory which the organization should follow for the following crises which they faced such as violation of labor law, uneven working hours, low wage etc. the organization should be responsible and respect their internal stakeholders providing all the pleasure of working and possess their responsibility towards being corporate citizen and contribute community. These employees help them to function and as the organization makes the profit grounded on the efforts of their employees so as per Carroll's theory should have greater ability to retain their staff providing all the necessary facilities and wages equivalent to live a basic lifestyle this way employees will pursue loyalty for the organization.

For the other situation where Foxconn has employees starting from the age 15 and this young employee travels from rural areas of China to Foxconn leaving their family and education. The long shift hours and poor working conditions mentally disturb them where the low wages and soaring prices of the meals at Foxconn leads these employees to work more hours so to save up for their families. Apple claims that they never compromise on their working conditions. As per Carroll's theory the organization while earn profit should contribute towards the society and the environment of the host country. After the news of 14 employees at Foxconn suicide Apple doubled the wages and provided a various rejuvenating facility which then lead to productivity and better economies of scale.

References

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