Apple's Current Position On Its Ethical And Social Responsibilities
Corporations are increasingly seeking a vision in maintaining social responsibility alongside a vision in business. There are also demands for greater accountability and transparency in corporate actions of organized consumers, state representatives and grass movements (Garsten, 2003). Many corporations aim to engage in corporate citizenship and to be socially responsible by adhering to social accountability standards and voluntary codes of conduct. This essay endeavors to examine Apple's current position on the social and ethical responsibilities and to determine whether it has met the responsibilities. The study also determines the impact caused by the violation of ethics and social responsibilities among Apple's suppliers.
Current Position on the Company's Ethical and Social Responsibilities
Corporate Social Responsibility comprises of actions that are not required by the law, but extend beyond the transactional interest of companies and further social good. CSR is often used to frame company relationships with stakeholders, strategies, and attitudes while addressing compliance with legal requirements, ethical values, and economic well-being. Extensive research suggests that CSR insures and protects corporate financial performance (Sarkis, Helms & Hervani, 2010). Sustainability is viewed in three dimensions covering the social, economic, and environmental constructs. Environmental sustainability emphasizes on the management of natural resources. Social sustainability puts emphasis on the management of social resources, which include social values, relationships, institutions and people's abilities and skills (Sarkis, Helms & Hervani, 2010).
Social sustainability entails nation's health, support for social justice, maintaining cultural diversity, and raising education standards. On a corporate level, it means that companies add value to their communities by furthering the capital of the communities and increasing human capital of individuals (Northrop, 2013). Companies are under pressure from different directions to incorporate the principles of sustainability into activities and policies. One of the frameworks that define social responsibility categorizes into four main areas, namely: Stakeholder Participation, Micro Social Performance Issues, External Populations, and Internal Human Resource (Sarkis, Helms & Hervani, 2010).
The internal human resources entail practices related to employment practices, capacity development, safety, and health and employment stability. Limited resources limit human resources support. According to research conducted in the U.S.A., virtually all firms that earn annual gross revenue of $1M or more offered health insurance benefit to their employees (Sarkis, Helms & Hervani, 2010). The category of employment stability entails both compensation and job opportunities. Employment stability is undermined by high uncertainty in flows of products and timing.
The environment is one of the most important issues that affect many countries globally. Waste removal, climate change, energy supply and demand, and other issues all affect the environment. The Corporate world is faced with numerous challenges on the way it responds to the environmental changes and modalities to improve them. Many organizations are including the environment in their overall business strategy. This includes designing ways to promote efficient energy use, elimination of waste, and the reduction of greenhouse effects (Creel, 2010).
Apple is a leading company in electronic and computer in the United States. Its products are created with the aim of reducing their impact on the environment through a design using smaller packaging and fewer materials without the use of toxic elements. It also focuses on producing products that are energy efficient and recyclable. For instance, Apple's entire line of products contains no arsenic, brominated flame retardant, lead or mercury. Its line of computers is made with 50% material that is less than the iMacs of the first generation (Creel, 2010).
Venture capital was recently added to the United System of innovation. Venture capital is set in the technological trajectories where it experienced its greatest success, biomedical industries, communications, and information. Many technology firms like Apple with roots in entrepreneurship and funded by venture capitalists have adopted the Venture Capital model (Kenney, 2011). Apple has been producing products that are technologically advanced. For this reason, I believe customers would be willing to pay more for the products if Apple was to increase the prices.
Apple Company is recognized worldwide for its remarkable success and its ability to create products that are innovative with vast customer appeal. Apple is constantly creating products that are innovative, resulting in a high level of profitability and fanatic consumer loyalty. However, Apple hides behind the constraints of prevailing industry practices when it comes to the management of its supply chain, and treatment of employees in the Chinese factories. These practices are in violation of national and local laws. It also violates Apple's voluntary code of conduct (Garsten, 2003).
I believe this behavior by Apple emanates from the business philosophy that states 'adroit exploitation of market power for the sole benefit of the company and investors.' It concentrates on cost culture vs. value culture. This model only concentrates on what is competitively achievable and not on fairness which is an ethical value. When Apple is dealing with clients, it applies the notion of value. It believes that customers pay for products based on the real and perceived value of the products. Thus, it is not obliged to reduce prices as long as its clients are satisfied (Northrop, 2013). When it comes to its employees' working conditions and wages, Apple uses its buying power to acquire these services at very low prices. This results in large shares of the Company and low shares to the workers. As an industry leader, it has the ability and obligations to set standards of conduct that will enrich the commons as well as the Company's investors (Northrop, 2013).
Foxconn is one of the most technologically sophisticated and largest manufacturers of electronic products. It serves clients like Apple, H.P, Sony, Microsoft, Intel, and Dell and cares a lot security and secrecy. Entry to Foxconn plants is almost impossible without authorization and permission of the plant management. This secrecy suited Apple, which was concerned about protecting its new innovative products and intellectual property from its competitors. This relationship between Foxconn and Apple is called a partnership, where a general partner manages the portfolio (Schneider & Valenti, 2010).
Most of Apple's employees-related problems were focused on Foxconn and its subsidiaries. In the recent years, news reports have described Foxconn workers committing suicide from working in extremely harsh conditions in the plants. In addition, there are reports of underage workers, involuntary labor, deplorable living conditions, and below-standard wages. There are reports of health hazards associated with inadequate air filtration systems and use of toxic chemicals. In 2011, an explosion in one of the plants killed three workers and injuring fifteen others. There are also numerous reports that have questioned the conduct of the employees in terms of falsified records, adverse health effects on workers exposed to chemicals like n-hexane. These activities were identified in Apple's audit reports (Creel, 2010).
The accusations made against Apple's administration were similar to those made against foreign clients of consumer electronics in China. Apple's response to the complaints is always slow and deliberate. It promises to carry out corrective action, which includes training of employees at Foxconn employers in human resource management. However, the rate at which the intensity of the matter fades is equally proportional to the decline in media attention. In the early stages of the problems, Apple was adamant in disclosing the name of Foxconn as its partner. However, it decided to do so after the name had gone public by consumer watchdog and news reports (Garsten, 2003).
At the end of 2011, Apple joined the Fair Labor Association and announced it with great fanfare. Apple asked FLA to conduct a comprehensive and independent audit of the Foxconn facilities. Apple vowed to make FLA's finding public and later take appropriate action. However, we see that Apple's faith is misplaced since FLA has a low credibility and extensive with worker-related issues in Latin America and Asia. Its board has a majority of industry representatives who exercise strong influence with regard to the scope of individual audits, verification of correlative action, plants that are audited and public disclosure of findings (Creel, 2010).
In February 2012, on FLA, conducted its first audit at Foxconn and concluded that Apple iPad plant was first class. However, based on human rights organizations and other NGOs, Chinese factories honed their tactics of concealing emerging problems from auditors. This is by coaching workers to give answers that are right to the auditors in terms of overtime, wage rates, and working hours, keeping employees away from plants during audit and maintaining multiple sets of workers' personnel files and sets of accounting books. The employers offer promises of bonuses if the auditors are satisfied and they are threatened with punishment if the auditors identify serious problems (Northrop, 2013).
As expected, FLA auditors found all the obvious problems that Apple's previous auditors had identified. Foxconn and Apple are yet to address the extensive infrastructure problems that are embedded in the manufacture, structure, and cost of Apple's supply chain in China. Apple faces five types of pressures that are external and that influence its operational policies and strategies. These external pressures include expectations…