Bài báo cáo môn Business Ethics Case 14: Apple Inc.’s Ethical Success and Challenges

lOMoARcPSD| 38777299 _____ _____
Họ, tên sinh viên: Phan Phương Anh MSV: 11220575 Lớp GĐ: A2- 08 Hà Nội lOMoARcPSD| 38777299 I. CASE SUMMARY:
1. Introduction:
Apple Inc., headquartered in Cupertino, California, has
encountered numerous challenges throughout its business
history. The company's stock price surged from $3.30 to
$705.07 between 1997 and 2012, reflecting its remarkable
growth. However, Apple's journey to becoming a major
corporation was not without difficulties, including leadership
changes and fierce competition. Despite attempts by other
companies to imitate and surpass Apple's products, the secret
to its success remains elusive. Apple has established itself as a
brand synonymous with quality, status, and innovation, earning
the loyalty of millions of consumers. This reputation has
enabled Apple to revolutionize both the technology and retail sectors on a global scale.
2. Apple’s History:
Apple Inc., previously known as Apple Computer, Inc., is a global
company engaged in the design, manufacture, and sale of
consumer electronics, computer software, and digital media
content distribution. The company's primary product lines
include the iPhone smartphone, iPad tablet computer, and
Macintosh personal computer. Apple sells its products through
online channels and operates a
chain of retail stores called Apple
Stores. It was founded on April 1, 1976, by Steve Jobs, Steve lOMoARcPSD| 38777299
Wozniak, and Ronald Wayne with the objective of
promoting Wozniak's Apple I desktop computer. The
company was officially incorporated on January 3, 1977, in Cupertino, California.
Apple’s first product, the Apple I,
was drastically different from the
Apple products of today. It was
constructed by Apple cofounder
Steve Wozniak. Despite the lack of
graphic user interface (GUI), and buyer had to add their own
keyboard and display, Steve Jobs
persuaded Wozniak that it could be marketed commercially.
Following the successful launch of Apple Computer Inc., co-
founded by Jobs and Wozniak, the company achieved sales
exceeding $1 million. However, the mid-1980s proved to be
challenging for Apple. In 1983, they released the Apple Lisa, priced at
$10,000, but it failed to gain traction in the market.
In 1985, internal conflicts led to Jobs being ousted from the
company, and Apple faced further setbacks with
underperforming products like the Mac I and the Newton.
Additionally, there were multiple changes in the CEO position.
These difficulties, coupled with declining stock prices, posed a
significant threat to Apple's future. lOMoARcPSD| 38777299
In 1997, Steve Jobs returned to Apple to try and save the
struggling company. Jobs immediately began to change the
company’s coroprate from “opened door” to “closed door”
policy which was done to prevent employess from taking
Apple’s ideas and technologies to another company.
Apple is still vigilant in securing its technology and ensuring that
information remains proprietary. Jobs also built a more flattened
organizational structure; rather of addressing employees via
layers of management, he addressed them directly. However, one
of the most visible shifts was Apple's growth into new product
lines in the electronics business.
In 2001, Apple introduced the iPod, a portable music player that
had a significant impact on the music industry. Alongside the
iPod, Apple launched iTunes, a software that allowed users to
import songs from CDs to their Mac computers, organize their
music collections, and manage them effectively.
In 2003, Apple expanded its offerings with the launch of the
iTunes Store, an online platform where users could purchase
and download millions of songs for $0.99 each. This move reflected lOMoARcPSD| 38777299
Apple's evolution from being solely a computer manufacturer to becoming a key player in the
consumer electronics industry. As a result, in 2007, the company changed its name from Apple Computer, Inc. to Apple Inc.,
signifying its broader scope and influence in the market.
Apple began to take marker share away from its major
competitors in the computer sector with the introduce of tablet
computers such as the iPad which was made the sale of
desktops, laptops, and netbooks began to decrease. Analysts
predict that tablet computers will continue to expand rapidly.
3. Apple’s Corporate Culture:
Apple’s transition from a computer to a consumer electronics
company is due to Steve Jobs’ leadership abilities, highly skilled
emplyees, and its strong coroprate culture.
Apple's culture places a strong emphasis on corporate
evangelism, which includes both employees and loyal
customers. These evangelists play a crucial role in promoting
Apple's products and creating a devoted following. This
phenomenon is particularly evident in the "Mac cult," where
customers who are passionate about Apple's Mac computers
actively advocate for the brand among their social circles. Upon
Steve Jobs' return to Apple, he introduced two significant
cultural shifts: encouraging open discussions and establishing a
shared vision that employees could rally behind. These changes lOMoARcPSD| 38777299
fostered a sense of loyalty and commitment among many individuals within Apple.
Apple takes pride in its own coroprate culture, providing
applicants with challenges and benefits and motivating itself as
a fast-paced, innovative, and collaborative environment. Retaill
employees that work well in its culture are also sought after,
with stations where customers can test and experiment with the lastest Apple products.
To make sure its retailer employees feel motivated, Apple
provides conprehensive training, higher pay, and opportunity to
move up to manager, genius, or creative. Apple also gives young
people the chance to intern with the company or become
student representatives at their institutions.
Furthermore, Apple provides incentives such as transit subdidies
for employees who opt to use public transportation in order to
lessen its environmental issues. Apple's free buses run on bio-
diesel. These incentives cut employee gasoline expenditures
while also decreasing pollutants emitted into the environment.
4. Apple Ethics:
Apple has established a code of business conduct to promote
appropriate behavior among its employees and business
partners. The code is based on four key principles: Honesty,
Respect, Confidentiality, and Compliance, all of which
contribute to maintaining integrity within the company. Apple
has implemented a Business Conduct Helpline to allow workers
to report any misconduct, and these reports are reviewed by
Apple's Audit and Finance Committee. In order to ensure
adherence to these standards, Apple requires all its suppliers to lOMoARcPSD| 38777299
sign the "Supplier Code of Conduct" and conducts regular factory audits.
Apple also publishes an annual Apple Supplier Responsibility
Report as evidence of its dedication to promoting responsible behavior among its suppliers.
5. Ethical Issues at Apple INC.:
Despite the fact that Apple make an effort to improve the
workplace, many ethical issues still existed which could have a
significant effect on the company’s future success. Apple’s
sterling reputation could easily be damaged by serious
misconduct or a failure to address risks appropriately, including: Privacy:
- Consumer tracking has become a subject of controversy as
advancements in technology have provided companies with
increased capabilities to monitor and track customers. With
the prevalence of social networking, mobile devices, and
internet usage, companies have greater access to consumer
data. It is important for businesses to prioritize customer
privacy and demonstrate respect in order to avoid negative reactions from the public.
- In 2011, Apple and Google sparked outrage when they
revealed that certain features on their phones collected data
on locations, which was seen as an infringement on user
privacy. Users may stop location tracking on their phones,
but Apple’s phones continue to gather location data even
when the feature is turned off.
- Apple blames this to a flaw in their new software that they
fixed. The government is considering a law on mobile lOMoARcPSD| 38777299
privacy, which could have significant effects on Apple and other electronics companies. • Price Fixing : -
In July 2013, a group of major
book publishers joined forces with
Apple to fix the prices of electronic
books (e-books). A federal judge ruled that Apple was
involved in an agreement where
publishers were required to offer the
best e-book deals to Apple's iTunes store. Apple was accused
of allowing publishers to set the prices for e-books on the
iPad, with Apple receiving a 30% share of the revenues
through the "agency model" approach. This approach, which
is less competitive than the wholesale model, was employed
in this case. The agreement aimed to ensure that e-books
sold on Apple's platform would be priced at the lowest
available retail price in the market.
- Following the deal with Apple, the publishers also
approached Amazon to negotiate a similar arrangement.
Apple has denied any wrongdoing and association with this
specific deal, and the company intends to appeal the court's
decision. It was alleged that Apple acted as the leader in a
coordinated effort to eliminate the retail price market and
increase e-book prices, likened to a gang-like behavior.. lOMoARcPSD| 38777299
"…guaranteed that the ebooks in Apple’s e-bookstore would
be sold for the lowest retail price available in the marketplace," Cote wrote.
- This chart from Cote’s ruling illustrates the pricing and payment breakdown: • Rioting: lOMoAR cPSD| 38777299 lOMoARcPSD| 38777299
- In early 2012, Apple made the decision to halt the sale of
iPhone 4S at its retail stores in China following a riot that
erupted outside its flagship store in Beijing. The large crowd,
estimated to be around 2,000 people, caused safety concerns
and prevented the opening of the Sanlitune store. To
prioritize the safety of both customers and employees, Apple
spokesperson Carolyn Wu announced that iPhone sales
would be suspended temporarily at retail stores in Beijing and Shanghai.
- In response to the incident, disgruntled customers expressed
their frustration by throwing eggs at the store and even
attacking a mall property manager who was mistakenly
perceived as an Apple employee. However, other Apple
stores in Shanghai and Beijing opened as scheduled and
quickly sold out of the iPhone 4S. Apple's handling of the
situation raised questions about their ethical approach and
the potential risks posed to the safety of both customers and employees. Substainability :
- Despite Apple's attempts to reduce its environmental
footprint, the majority of its emissions in 2011 came from the
life cycle of its products. Apple disclosed that out of the total
emissions of 23.1 million metric tons of gases, only 2 percent
were generated by its facilities, while the remaining 98
percent were a result of the life cycle of its products.
- Criticism has been directed at Apple regarding planned
obsolescence, but the company endeavors to incorporate
recyclable materials in its products. It has implemented a
recycling program at its stores, allowing customers to trade lOMoARcPSD| 38777299
in old iPods, mobile phones, and Mac computers for gift
cards or discounts. However, many consumers still find it
more convenient to discard their old products, particularly if
they hold no significant value. The issue of e-waste persists
as long as consumers continue to dispose of their electronics.
- Apple faced controversy when it temporarily removed 39
products from the EPEAT green standards rating system,
which is widely used by buyers to assess the environmental
impact of computer products. Following negative feedback
from consumers, Apple eventually reengaged with the EPEAT
rating system. As sustainability gains increasing importance,
Apple must consider consumer reactions carefully before
implementing any changes that may have environmental implications.
• Intellectual Property:
- Apple has been actively involved in protecting its intellectual
property rights and has taken legal action against other companies in cases of
alleged theft. One notable lawsuit occurred in 1982 when
Apple sued Franklin Computer Corporation for copying and
using the Apple II operating system. Although the initial
ruling favored Franklin, it was later overturned, establishing
the protection of code and programs under copyright law.
Another significant lawsuit involved Apple's claim against
Microsoft, alleging similarities between
Microsoft's Windows operating system and Apple's
Macintosh graphical interface. However, the court ruled in
favor of Microsoft, stating that the licensing agreement did
not cover the overall "look and feel" of Apple's system. lOMoARcPSD| 38777299
- Apple has also faced ethical controversies concerning domain
name disputes. In one instance, Apple attempted to acquire
the domain name iTunes.co.uk from its registrant, Ben
Cohen. After unsuccessful negotiations, Apple appealed to
the UK registrar, claiming that Cohen had misused his
registration rights. Eventually, Apple obtained the rights to
the domain name, raising concerns about preferential
treatment toward larger companies.In another case, Cisco
accused Apple of infringing on its iPhone trademark. Apple
and Cisco engaged in discussions about the use of the
trademark, but Apple eventually withdrew and registered the
iPhone trademark under a different organization. This action
was seen as an unfair way to bypass negotiation procedures.
The lawsuit concluded with an agreement allowing both
companies to use the iPhone name, but Apple's actions remained controversial.
- Overall, Apple's aggressive approach to protecting its
intellectual property raises questions about the legitimacy of
its claims and whether it aims to undermine its competitors.
The courts play a crucial role in determining the validity of Apple's allegations.
• Threats to Other Companies:
- A recently disclosed document has revealed that in 2007,
Steve Jobs, the former CEO of Apple, allegedly used the
threat of patent litigation to pressure Palm's CEO, Edward
Colligan, into refraining from recruiting Apple's valuable
employees. Jobs proposed an informal understanding that
involved a non-poaching policy between the two companies,
as well as other prominent firms such as Adobe, Google, lOMoARcPSD| 38777299
Intel, Intuit, and Pixar. The release of this document was
prompted by legal disputes initiated by former Apple employees.
- Jobs firmly expressed his position on the matter to Colligan,
who countered by asserting that Apple's employees were fair
game for recruitment and that engaging in such collusion
would be highly unethical. Subsequently, in 2010, the U.S.
Department of Justice filed an antitrust lawsuit against the
implicated companies, leading to the mandated dissolution
of the alleged agreement. Tim Cook, Apple's current CEO,
emphasized that only Steve Jobs had knowledge of the
agreement, and no other Apple employees were implicated in the matter.
• Supply Chain Management Issues :
- Apple takes measures to ensure supplier compliance by
implementing a supplier code of conduct and conducting
factory audits. The company has trained a large number of
workers on their rights and increased the number of audited
suppliers. External organizations are also involved in
evaluating Apple's labor practices. However, in recent years,
Apple has faced significant supply chain issues that have
raised concerns about its ethical standing.
- To meet the demand for its products, Apple relies heavily on
production in Asia, particularly within Foxconn factories in
China. However, allegations of improper working conditions,
underage labor, and worker mistreatment have been raised, lOMoARcPSD| 38777299
including instances of suicide. These accusations have
tarnished Apple's reputation and led to criticism.
- Despite Apple's efforts to enforce strict supplier compliance
standards and conduct audits, more than 50% of audited
suppliers have violated aspects of the supplier code of
conduct since 2007. Suppliers argue that Apple's
manufacturing standards are difficult to meet due to slim
profit margins. As a result, suppliers resort to cost-cutting
measures such as longer working hours and the use of
cheaper but more hazardous chemicals.
- Apple's own audits have revealed noncompliance with
working-hour limits (62%), failure to meet safety standards
(35%), and inadequate management of hazardous substances
by its suppliers (32%). The company has encountered issues
with underage workers, falsified records, overcrowded
dormitories, and other labor violations. Apple acknowledges
the need for improvement and aims to enhance supplier
conditions while increasing transparency in its labor
processes. While Apple gives suppliers 90 days to rectify
policy violations, the company has dropped fewer than 15
suppliers for such violations since 2007.
- Apple's supply chain has faced significant scrutiny due to
highly publicized incidents, including chemical-related
illnesses, explosions, and worker suicides. Foxconn, Apple's
main supplier, has a history of labor violations but claims to
comply with regulations. Some attribute the poor factory
conditions to Apple's emphasis on innovation and the
pressure to release products quickly, compromising safety
standards. However, limited alternatives for manufacturing lOMoARcPSD| 38777299
Apple devices make it difficult for the company to switch
suppliers. Inconsistent labor standards and intense industry
competition contribute to similar challenges faced by other electronics manufacturers.
- Apple asserts its commitment to improving supplier
conditions and increasing transparency. CEO Tim Cook
personally visited Foxconn to evaluate labor conditions and
collaborated on initiatives to enhance worker safety. The
company has worked with the Fair Labor Association and
implemented a significant number of their
recommendations. While progress has been made,
continuous monitoring and enforcement of ethical standards
are essential for Apple to demonstrate its dedication to the
well-being of workers in its supply chain.
• The Future of Apple INC:
- Apple remains optimistic about its future, buoyed by its loyal
consumer base and its reputation for providing superior
products. The company has expanded its presence in the
music industry through iCloud, a service that allows users to
access their music collections
seamlessly. Apple's dominance in the market is supported by
its extensive library of songs and agreements with record
labels. There are also indications that Apple is venturing into
wearable computing with the potential development of an
iWatch. This move aligns with the growing trend of wearable
devices in the tech industry, with competitors like Google,
Samsung, and Microsoft also entering the market.
- To combat investor concerns about innovation, Apple has
reportedly been testing larger screens for smartphones and lOMoARcPSD| 38777299
tablets. The company aims to refine existing products while
continuing to introduce new ones in order to expand its
customer base. However, Apple faces threats such as
lawsuits from competitors over intellectual property
violations. The company's closed system approach, while
protecting its products, may also hinder collaboration and
innovation compared to more open-source competitors like Google.
- The death of Steve Jobs, Apple's iconic founder and CEO, has
placed the spotlight on Tim Cook as his successor. Cook
brings a more traditional management style focused on
project and supply chain management. While some worry
that Cook lacks the visionary creativity of Jobs, others believe
his strategic management skills can make Apple more
competitive. The change in leadership style has raised
questions about how it will impact the company's culture.
- Despite recent skepticism, Apple has a track record of
adapting to the rapidly evolving tech industry. Its
diversification, collaborative culture, and ability to
understand consumer needs have propelled its success. II. QUESTION:
1. Explain how Apple’s philosophy and organizational culture have
impacted how it handles ethical decisions:
Apple Inc. Has established itself as a prominent technology
company known for its innovation and distinct brand identity. A lOMoARcPSD| 38777299
key factor in achieving this success has been the development of
a clear philosophy and organizational culture.
Apple’s focus on delivering high-quality products has led to a
strong emphasis on maintaining a positive brand image. The
company has implemented measures to ensure ethical practices
within its supply chain, such as its supplier code of product and
factory audits. Apple aims to project an imagee of being an
ethical and socially responsible organization.
Apple's culture of innovation and emphasis on secrecy can
create challenges when it comes to ethical decision-making.
Prior to Steve Jobs’ return as CEO, Apple followed an open-door
policy, allowing competitors to gain insight into their statergies.
However, Jobs swiflty implemented a “closed-door” policy to
safeguard their intellectual property and maintain a competitive
advantage. Apple has also shown a willingness to address ethical
concerns and improve its practices. The company has made
efforts to increase transparency, engage with external
organizations for auditing and evaluation, and collaborate with
industry initiatives like the Fair Labor Association. Apple's CEO,
Tim Cook, has personally visited suppliers and taken steps to
enhance worker safety and conditions. Overall, Apple's
philosophy and organizational culture influence its ethical
decision-making by prioritizing product quality, brand
reputation, and consumer satisfaction. While there may be
challenges stemming from the company's culture of innovation
and secrecy, Apple has demonstrated a commitment to
addressing ethical concerns and improving its practices in its supply chain. lOMoARcPSD| 38777299
2. Why is Apple’s industry so competitive and how could this affect the
ethical risk in Apple’s operation?
Because of the rapid pace of technological advancements, which
drives companies to constantly innovate and release new
products to stay head. Furthermore, the demand for consumer
electronics, such as smart phones, tablets, and computers, is
consistently high, leading to intense competition among
companies to capture market share. This high level of
competition can impact the ethical risks in Apple’s operations in several ways:
- The pressure to outperform competitors and meet customer
demands may create a heightened focus on productivity and
profitability, potentially leading to ethical shortcuts or
compromises in areas such as labor practices, supply chain
management, or environmental sustainability. For instance, in
an attempt to cut costs and meet aggressive production targets,
suppliers might be compelled to violate labor standards or use hazardous substances.
- In a fiercely competitive market, there may be a temptation for
companies to engage in unethical practices to gain a competitive
edge. This could include intellectual property infringement, false
advertising, or anti-competitive behavior. Apple, as one of the
leading players in the industry, may face increased scrutiny and
pressure to maintain its market position, which could introduce
ethical risks if not managed effectively.
It is important for Apple, as well as other companies in the
industry, to establish robust ethical frameworks and compliance
programs to mitigate these risks. This includes enforcing strict lOMoARcPSD| 38777299
supplier standards, conducting regular audits, promoting
transparency throughout the supply chain, and engaging in
responsible marketing and business practices. By prioritizing
ethics and ensuring ethical behavior across its operations, Apple
can navigate the competitive landscape while maintaining its
commitment to responsible and sustainable business practices.
3. How do you think Apple has handled the various ethical issues that it
has faced in the past?
Apple has encountered several ethical challenges in the past,
and its methods of addressing these concerns have been a topic
of discussion and analysis. Here are a few instances illustrating
how Apple has dealt with specific ethical issues:
- Supply Chain and Labor Practices: Apple has taken steps to
improve working conditions in its supply chain. It has
implemented supplier codes of conduct and conducts audits to
ensure compliance. The company claims to have trained
workers about their rights and increased the number of supplier
audits. However, reports indicate that violations of labor
standards still persist among some suppliers.
Apple has faced criticism for not taking more decisive action in
holding suppliers accountable and for the ongoing challenges in improving labor conditions.
- Environmental Impact: Apple has made efforts to reduce its
environmental footprint. The company has set goals to increase
the use of renewable energy, reduce greenhouse gas emissions,
and minimize the use of hazardous substances in its products. It
has also made progress in recycling and responsible disposal of lOMoARcPSD| 38777299
electronic waste. However, there have been concerns about the
company's supply chain's environmental impact and the overall
sustainability of its products.
- Privacy and Data Security : Apple has positioned itself as a
champion of user privacy and data security. It has implemented
features such as endto-end encryption, strict App Store
guidelines, and privacy-focused user controls. The company has
resisted requests from government authorities to provide
backdoor access to user data. However, Apple has faced
criticism for its handling of certain privacy incidents, such as the
iCloud celebrity photo leak, and for controversies surrounding
its cooperation with governments on data access.
- Intellectual Property and Patent Disputes : Apple has been
involved in various high-profile patent disputes with
competitors. The company has actively defended its intellectual
property rights through legal action, seeking injunctions and
damages. While some argue that these actions are necessary to
protect innovation, others criticize Apple for engaging in patent
wars and stifling competition.
Overall, Apple's response to ethical issues has been a mix of
proactive measures, ongoing challenges, and areas of
improvement. The company has made efforts to address
concerns in its supply chain, environmental impact, privacy, and
intellectual property. However, there are differing opinions on
the effectiveness and adequacy of Apple's actions, with critics
arguing for more transparency, accountability, and stronger
enforcement of ethical standards. lOMoARcPSD| 38777299 SOURCES
1. Business Ethics: Ethical Decision Making and Cases – Tenth edition
2. [ CITATION Bro131 \l 1066 ]