Apple Inc is a multinational corporation whose headquarters are in United States. The company develops, designs, sells computer software, consumer electronics and personal computers. Apple Inc initiated its operation in 1976. In terms of revenues, it is the second largest company in the information technology field. The company had been singled out as the most admired in United States in 2008 (Gilzean, 2012). The company’s leadership had contributed immensely to this realization. However, this has not lived to be the case due to various ethical challenges that have marred the company.
Apple Inc has a large number of stakeholders based on its scope. Some of the stakeholders are involved directly with the company while others are involved indirectly. They include shareholders, employees, software developers, manufacturers, suppliers, customers and lenders among others. Shareholders are involved in investing their resources so to meet the company’s financial objectives. Their resources are involved in all operations starting from acquisition of raw materials up to the consumer supply chain. Lenders tend to boost the company’s financial prospects during the periods of recession or when urgent funds are required in the organization. Suppliers help in making sure that all the necessary raw materials are availed for manufacturing purposes. Employees on the other hand play a fundamental role in ensuring that all the operations are executed in the best way possible. This makes it necessary for the organization to cater for their needs. They are indispensable in the organization more so based on their experience (Christopher, 2012). Customers are the end users of the products and services being offered by the company. They are the ultimate reason as to why Apple Inc is in operation. They are key determinants on whether the company is going to make a profit or a loss.
The company’s mission statement is commitment to enhancing personal computing experience to educators, consumers, creative professional students around the globe using its innovative software, hardware and internet offerings. Apple’s vision statement is somewhat complex and not clear to many people including some employees. It states that “man is the creator of change in this world. As such he should be above systems and structures and not subordinate to them”
Apple Inc has had several ethical challenges in the past. Among them, are the ones created by their manufacturers (Foxconn). Foxconn is a manufacturing company based in china. They are involved in manufacturing electronic products for a variety of leading companies like Samsung. Apple Inc had some reasons that prompted the company to outsource its manufacturing activities. This includes the competitive nature of the Information Technology industry. In light of the competition, Apple had the desire of increasing its profitability prospects. Shifting production activities in china would have made this come true. Production in china would have minimized the cost since the materials found there and the labor is quite cheap. There was also the need of meeting the high demand of the company’s products. Consumer needs would have been satisfied by outsourcing the production process hence giving the company ample time to concentrate on other issues.
In 2010, Apple-foxconn was accused of using child labor and providing poor working conditions. This scenario was quite evident in Foxconn while comparing the wing that was involved in manufacturing Apple products, and other products that the company was involved in. Employees in the company were subjected to hazardous working environment based on the nature of raw material that was being used in the organization. There was no protective clothing provided to these employees. It was the duty of the company to take care of their well being, but this notion did not materialize. In addition to the working environment not being conducive, the wages paid to employees were very minimal. It was evident while comparing what employees in United States were earning and what the employees in this plant got. There are tendencies of wage differentials existing, but this one was excessive. Employees were subjected to a 66-hour week. This was illegal according to the law which had outlined a provision of 44 working hours at the maximum. Breaching the law comes with certain consequences. However, this did not prevail since almost all the employees working in this plant were not unionized. There was no one to air their grievances (Christopher, 2012). NGOs were among the parties that took the issue with intent, but their influence was not immense. In order for Foxconn to meet deadlines, employees also had to work overtime without any additional pay. Such instances mounted the pressure upon employees working in this plant. During this period, a number of suicide cases were reported from the plant. Many people believed that the pressure resulting from the working environment was the ultimate reason for these suicide cases.
Foxconn was also utilizing child labor since it was cheap. This makes it favorable to an organization of this nature. The act was criticized by a variety of NGOs, and several law suits emanated from this action. Beauchamp (2011) asserts that Foxconn were involved in such activities due to the terms offered by Apple Inc. Apple Company was said to be offering low pricing to the manufacturer despite its high profit margins. Some reports claimed that the unfavorable pricing prompted Foxconn to adopt child labor in order to reduce costs so as to make significant profits.
This issue came to be an ethical challenge to Apple Inc. On one side, the company was able to increase its profits due to the outsourcing process. However, it was detrimental since it deteriorated the organization’s image. The company was operating at the level of enhancing social responsibility towards all its stakeholders. Treating the employees in a manner that they were being treated went against the company’s policies and was not acceptable. This resulted to an ethical dilemma.
Apple had to step in and try to solve the problem. The company’s management hired Fair Labor Association to conduct an inquiry into the problem. Their ultimate responsibility was to conduct an audit regarding the working conditions in this manufacturing plant. This body used employees’ survey in order to get the actual picture of how things are. The results gathered from this survey were analyzed quantitatively. According to the report, the working conditions were not up to the desired standard. Employees were working longer hours than it was stipulated by the law. Usage of child labor was also evidenced in the plant (Beauchamp, 2011).
Apple’s leadership came up with variety of ways that were aimed at eliminating this challenge. Its persistence would have damaged the company’s image among the consumers and other key stakeholders like lenders and shareholders. To begin with, Apple ordered the retrenchment of all under-age employees from the Foxconn plant. A panel was set aside to oversee this process. There were thorough check-ups on employees that remained and others that were being employed as replacements. Valid documents that could verify one’s age were made mandatory upon requesting any employment positions. This was regardless of the nature of job being executed. This was designed to discourage utilization of child labor in the plant. If this task was done thoroughly, it is not known to the general public. This is because current reports indicate that such instances still exist (Gilzean, 2012).
The company also took a step further in trying to enhance social responsibility towards employees. Among the strategies used was reducing the number of working hours to the set standard. Going beyond the set limit would be viewed as breach of the law whereby Foxconn would be liable to lawsuits. Working overtime was subject to employees’ choice. No employee would be required to work overtime if he or she was not willing. This came along with a 20% increase in wages for all workers regardless of the occupation in the manufacturing plant (Beauchamp, 2011). This coming from the company was like a bribe directed to employees. There is always a tendency for employees to forget the wrongs done before if the future prospects are promising and favorable. It would boost employees’ motivation hence increase productivity without requiring them to work longer hours. Apple also made an agreement with Foxconn for them to increase the number of employees involved with the production process. Increasing the number was aimed at reducing the amount of pressure subjected towards employees. However, this was difficult for Apple to implement since they did not employ these people directly. The working environment was also changed in a way since employees were afforded the chance leaving the production site from now and then. This did not happen before hence it would come as a great relief to them.
Another action that was taken is installation of suicide nets along the plant’s premises. This could reduce suicide cases that emanated from jumping from roof tops. Employees were also subjected to signing contracts that deterred them from committing suicide. Anyone that committed suicide, his or her family would not be compensated. The company’s argument was that employees cared about their families and would not want to leave them in agony.
Apple’s leadership did not manage this challenge effectively. Most of these solutions were short-term hence the challenge could occur again. They did not bother to go to the root cause of the problems. Gilzean (2012) asserts that current reports indicate that this challenge has come back to haunt Apple Inc. Issues that were seen previously have seemed to surface. It might even become worse since these actions are being reported in other manufacturing plants that Apple Inc partners with.
Apple’s leadership team ought to have done better in dealing with this ethical challenge. This is because leadership is a critical skill which creates a reality that engulfs the vision of the future. A leadership team in any organization needs to devise strategies that will last in both long-term and short-term (Henderson & Florence, 2009). Solutions put forward by Apple’s leadership could only survive the short-term period and fail to work in the long-run. Among the things that the leadership would have done to deal with this challenge, is employing a transformational style of leadership. Through the transformational leadership style, apple would have changed ways in which it deals with Foxconn and other manufacturing plants. This would have been achieved by devising contracts to be signed between the company and the manufacturing plants. On these contracts, Apple should have specified the nature of environment that it wants the employees working on its products to be subjected to. This would mean that the company is trying to extend its corporate social responsibility aspects to all employees working on their products irrespective of their geographical location. If Foxconn or any other manufacturing plant breaches these terms, there are consequences to follow. The consequences might include heavy fines or termination of the working contract. In the current global economy, the competition is very high. There is no company out there that wants to lose its consumers since it would be giving its competitors a competitive advantage. Such occurrences would force Foxconn to play alongside the stipulated rules.
Apple also had the opportunity of employing the charismatic leadership style to help solve the problem. This type of leadership style focuses on leaders having a radical vision by providing solutions to impossible problems and having a willingness to take risks (Henderson & Florence, 2009). The risk that Apple Inc would have taken is ending its business partnership with Foxconn. This is because the two entities seemed to have different approaches on how they conducted their business. To Apple Inc, corporate social responsibility was vital for the organization’s operations. This was not a similar case with Foxconn. For them, profits maximization was the ultimate goal regardless of how it was going to be achieved. Occurrence of such a situation meant that the two organizations did not have any ethical ties between them. By Apple Inc taking the risk of ending this partnership, it would have sent a huge message to other manufacturing plants that it works with. None of them would want to indulge in similar behavior as Foxconn due to the consequences involved. This would be a long-term solution to the problem.
During the time when this issue had taken the headlines, there were reports that Foxconn offered this poor conditions due to the amount of money that Apple was willing to pay for their services. It was their way of maximizing on the available resources. If this was the case, then Apple Inc should have applied the principled leadership style. This means leading while one is being guided by values such as honesty, caring and integrity. To show its integrity, Apple should offer Foxconn better pricing for their services. This would be also a way of showing that they care for the manufacturing plant. Foxcon would take a similar step and reciprocate this towards its employees. If this was the case, this ethical issue would have been a thing of the past. Sometimes it is true to say that you always get what you pay for.
In conclusion, Apple Inc’s status of being the most admired company in United States has not lived to be the case due to various ethical challenges that have marred the company. The partnership with Foxconn has resulted in ethical challenges towards the company. Approaches that the leadership has used to solve the challenge have not been quite effective. This is because they focus more on short-term other than long-term sustenance.
Beauchamp, T. (2011). Ethics Behind Apple and Foxconn Relationship. Green Economy, 13(6), 12-34.
Christopher, E. (2012). International management: explorations across cultures. London: Kogan Page.
Gilzean, L. (2012). Foxconn and Apple Fail to Fulfill Promises. Chinese Labor Force, 11(9), 17- 28.
Henderson, S., & Florence, S. (2009). Leadership Tasks and Functions. Corporate Social Responsibility, 2(1), 91.
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