Ethical issues and dilemmas have always been hitting the operational performance and sustainability of business organizations. They directly affect the way an organization formulates and implements its policies, operates as an active participant in the industry, and competes with other organizations for the sake of accomplishing its strategic objectives. Ethical issues may relate to the organization's social responsibility or corporate responsibility; both are vital for the organization to ensure a sustainable future in its industry. This paper discusses an ethical issue which was faced by one of the world's most admired organizations -- Apple Inc. The main purpose of the paper is to highlight the ethical issue in which Apple was involved; the consequences of the ethical issue and the individuals involved in the process. The paper starts with a brief introduction to Apple; its main product offerings, industry, scale of operations, and major strategic decisions which it makes to operate as a competitive organization. The main body of the paper discusses the issue from an ethical standpoint, i.e. what are the grounds which make the steps taken by Apple unethical in the eyes of society and the Law.
Apple Inc. (formerly Apple Computers Inc.) is a successful American owned Multi-National Corporation incorporated in 1976. It manufactures, promotes, and sells various kinds of electronics and technological products. Apple's most recognized products are the Personal Computers (Mac) and laptops, iPhones (a multi-touch smart phone with numerous functions and advanced features), iPods (light weight handy music players), software (Macintosh Operating System), iTunes (movies, music, etc.), and iPads (tablet PCs). Moreover, Apple also specializes in headphones, printers, speakers, digital cameras, storage mediums, and many other computer and mobile accessories. All the Apple products have a high level of acceptability in the market which makes it the most admired, successful, and competitive brand all over the world. Apple Inc. has a strong presence in PCs, laptops, technological products, and cell phone market all over the world. Its products are highly innovative, stylish, and give an astonishing experience to their consumers. The industry where Apple competes is also recognized as the fastest growing industry of the world with respect to sales revenues and consumer base. Although Apple products are highly expensive; but still they are the most demanded products of the present times. Apple has achieved this brand value strength through its highly innovative product and process designs (Apple, 2012).
Child Labor -- The Ethical Issue
About Child Labor:
Child labor refers to the employment of children for lower level labor works while they are in the age of getting education and enjoying their childhood. Child labor is considered as one of the biggest issues which the world has been facing since the evolution of industrialization. It is an ethical issue for the societies, business entities, and the whole economies because it deprives a small age child from enjoying the basic happiness of his life. While a child is at work, he is unable to get education in a school, play with his siblings and elders, and enjoy other excitements which normal children have in their life. Child labor is an ethical issue because it is harmful for the children in both social and mental ways. There are various other reasons which make child labor the most hated practice all over the world.
Business Organizations are Profit-motive entities:
Business organizations are the major players in promoting child labor in the world. Child labor is mostly observed in under-developed and developing countries where the families do not have sufficient financial resources to educate their children while living from hand to mouth in a very low wage or income. In order to survive in the worse family conditions, parents send their children for lower level work in different factories and plants nearby their houses. Now the question arises why business entities hire these small children for their labor work despite the fact that child labor has been banned in many countries of the world. The answer for this question is the low costs of production which ultimately increase the profit margins of the companies. Children are hired at very low daily wage rate while they work for the companies like full time permanent workers. The companies take the advantage of poor family conditions and hire these small children to get the work done in a very cost effective fashion. They are just profit-motive entities which show little or no concern for the welfare of the society. Instead of offering jobs to the educated and deserving elders from the country, they hire children on low wages in order to save the costs of doing business.
How Apple is involved in Child Labor?
The same case is with Apple Inc. which uses outsourcing for its production units. Outsourcing refers to taking services of international manufacturing firms that can produce the required spare parts for the company at lower prices. Apple is an American business entity, but it uses outsourcing for the spare parts of its electronic gadgets and smart phone like iPad, iPhone, iPod, etc. Apple has outsourced its production of small spare parts to Chinese companies due to the fact that labor is very much cheaper than it is in the United States or other developed countries. Due to this cheap labor, the costs of production are reduced to a considerable extent. Apple, like numerous other multinational corporations uses outsourcing as a cost management and reduction strategy.
Outsourcing itself is not an unethical business practice; but child labor in Chinese companies has made it a big ethical dilemma for business entities. China is a country of low wage rates due to a large population size and involvement of women and small children in employment. There are thousands of companies in China which are using child labor in their production units and plants. These companies constitute vendors and suppliers of raw material and spare parts that are manufactured for large scale brands from the local and international markets. These companies outsource different projects from the production operations in order to save their costs of production by getting benefit from the lowest rates of child labor (Hyatt, 2012).
Foxconn -- the supplier for Apple Inc. In China:
The accessories and spare parts of iPhone, the most successful product of Apple Inc., are produced in the Chinese markets by different small and large scale manufacturers. Apple faced an ethical dilemma when it was accused of taking the services of Foxconn Company which openly uses child labor for its production processes. Apple's top quality products like iPhone, iPad, iPod, Macbook, laptops, etc. are premium priced despite using outsourcing from Chinese markets (Apple, 2012). It apparently shows that Apple is just concerned with its profits instead of giving any importance to its corporate social responsibility. It cannot be said that Apple is not familiar with the working environment and industrial patterns which Foxconn has instituted at its workplace. The fact is that Apple wants to increase its financial performance by producing its iPhones and other products at the cheapest rates while selling them at the highest prices in the market (Enderle, 2010). This ethical issue badly affected the company's image in the international community. The share price of Apple sharply fell soon after this ethical scandal came into the knowledge of its investors.
Individuals involved and impacts of the Ethical issue:
The issue of child labor was a part of cost management strategy in which all the Board of Governors, top management, and the suppliers were involved. Apple had introduced its first iPhone in the supervision of its former CEO and co-founder, Steve Jobs (late). At that time, the company entered into an agreement with Foxconn that it will produce spare parts and accessories for its iPhone at cheap rates. Therefore, the major players in this ethical issue were…