Ethical issues in Apple's business practices

Ethical Issues at Apple

Apple Inc. is one of the leading global companies, but in spite of its success, it is also faced with some legal and ethical issues, such as the employment of under-aged workers in ten of its plants in China. The company is striving to address these issues as apart of a wider commitment to transparency and sustainability, but more dramatic measures might be necessary.

Apple Inc. is one of the largest companies of the globe, having in fact the largest capitalization of al companies -- 563 billion (Y Charts, 2012) -- and also being the largest company in the IT field, generating more revenues that Microsoft and Google combined (Goldman, 2012). Apple is mostly popular due to the high level of technologic innovation it has made fun and easily available to the larger market. But aside from its success, the company has also been blamed for some of its operations and decisions, some of these having a legal nature, whereas others being more ethical in nature. One particular issue that is both illegal as well as immoral is represented by the employment of children in the factories of the organization. This project then sets out to assess the issue, identify the impacted stakeholders, the effect of the violation and reveal some measures that would prevent such situations from reoccurring in the future.

2. Company history

Apple Inc. was established in 1976 in Cupertino, California by Steve Jobs and Steve Wozniak and has made its debut with a personal computer kit. Gradually however, the company came to develop a wider array of products, as well as services. Some of the most popular products Apple sells today are the iPad, the iPod or the Macintosh computers.

Historically, Apple only operated in the United States, but commenced to open plants in foreign locations in order to take advantage of their cost efficiencies. The strategy has supported the already high profits of the corporation. Nowadays, the organization employs over 60,000 individuals worldwide and operates through over 360 stores worldwide (Website of Apple).

3. Child labor at Apple

In the pursuit of low costs and high profitability, Apple Inc. came to open, operate and partner with numerous plants from third world countries. These plants would provide the company with low cost labor force and, in often cases, the legality and morals of these plants was questioned. The plants were as such having the employees work in unsafe and unsanitary conditions, in long schedules and for low wages (Criticism of Apple, 2010). Despite their perception of creating employment opportunities in the third world countries, these conditions only perpetuated the state of poverty in the regions.

Also, a highly stringent issue recently addressed by the media is represented by the discovery of children working in the Apple plants abroad. More and more children are found to be working in the Apple plants that manufacture the iPods, the computers, as well as the mobile telephones. Last year, Apple admitted that it had found 91 children under the age of 16 employed in its Chinese plants, revealing a growing trend from the previous year, when only 11 under aged laborers had been identified in China.

In the recent audit, there were ten Chinese plants employing individual under the working age in the country (16). The results had been retrieved by an audit implemented by the firm and it had also found that another 31 under-aged individuals had been employed while too young, but had meanwhile gotten to the legal working age.

Most of these children had been recruited through schools and labor agencies in China and they were the result of the company's desire to promote Apple as an employer in China, but also of the failure of traditional employment channels. A small portion of the minor workers were recruited via the factory, most likely through recommendations of other plant employees (Apple Supplier Responsibility, 2011 Progress Report).

The company has taken a rather straightforward approach to the matter in the meaning that it intervened and focused on sending the children home and reintegrating them within the educational system. Also, it must be mentioned that the company is the single IT firm to audit its supply chain system and publish the results, showing as such its transparency and commitment to adhere to legal and ethical issues alike (Moore, 2011).

4. Impact of violations

The employment of under-aged laborers in Apple's Chinese plants could create numerous impacts upon some of its stakeholder categories, as revealed below:

The children found to be working in the Apple facilities were let go from the company and they were no longer able to gain incomes, which might further impact their families and financial stability

The children were nevertheless reintegrated in the educational system and would stand better chances of education and a better life. Also, they were protected from exploiting working conditions

The mature employees could have also been subjected to moral questioning as they were forced to accept the immoral and illegal practice of child labor and their morale and performance would have decreased

The Apple investors, business partners and the general public would have been scandalized by the issue and would have revealed a diminished interest in the Apple products, services and the company.

At the level of the organization however, the effects of the ethical and legal violation were unsettled and it is yet unknown what was the financial effect of the situation. It could nevertheless be speculated that the company had invested some financial resources in the management of the problem.

6. Prevention

Apple's problem with child labor is becoming more severe in the global context and fight for human rights. At this level, a question is being raised regarding the actions which could still be taken in order to limit the issue of child labor in the company's foreign plants. As an immediate response to the media stories, Apple conducted an internal audit on the hiring practices in its foreign factories. In China, it has identified that the manufacturing facilities seldom verify the actual age of the employee, or conduct a thorough verification of the candidate's identification. The company has as such demanded that superior verification systems be instated and that the plant managers followed specific training programs, and then "follow up with one-on-one consulting" (Apple Supplier Responsibility, 2011 Progress Report).

Still, aside from the practical and technical measures taken, it must also be noted that under-aged employment is only possible in the circumstances of it being permitted by the managers. In such a setting then, it is recommended for Apple Inc. To take more drastic measures against the plants and managers which permit -- or even encourage -- under-aged employment. A measure in this sense could be represented by the sanctioning of the manager or the human resource staffs, which could even be extended to the firing of the person responsible for the hiring and exploitation of a child. In a more severe situation, a drastic solution would be represented by the company's rupture from the plant in the meaning that the corporation would no longer collaborate with the respective plant. Finally, the American IT organization should always report these situations to the authorities and fully support the legal resolution of the issue.