Business ethicsreport case 14 apple inc ’s ethicalsuccess and challenges

BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN o0o BUSINESS ETHICS REPORT CASE 14: Apple Inc.’s Ethical Success and Challenges Họ tên sinh viên: Hoàng Thị Tuyết Nhung Mã sinh viên: 11214615 Lớp: Quản trị kinh doanh quốc tế CLC 63A I APPLE’S HISTORY - Apple Computers, Inc was founded by college dropouts Steve Jobs and Steve Wozniak, who brought to the new company a vision of changing the way people viewed computers Jobs and Wozniak wanted to make computers small enough for people to have them in their homes or offices - Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that creates consumer electronics, personal computers, servers, and computer software, and is a digital distributor of media content The company also has a chain of retail stores known as Apple Stores Apple's core product lines are the iPhone smartphone, iPad tablet computer, and Macintosh computer line Founders Steve Jobs, Steve Wozniak, and Ronald Wayne created Apple Computer Co on April 1, 1976 - Apple’s first product, the Apple I, was vastly different from the Apple products of today Jobs and Wozniak started out building the Apple I in Jobs' garage and sold them without a monitor, keyboard, or casing This first handmade computer kit was constructed by Apple co-founder Steve Wozniak It lacked a graphic user interface (GUI), and buyers had to add their own keyboard and display Co-founder Steve Jobs convinced Wozniak that it could be sold as a commercial product In 1976 the Apple I was unveiled at the Home Brew Computer Club and put on sale for $ 666.66 This strange price is offered because its creator, Wozniak “likes repeating digits” - Although the Apple II computer model was released in April 1977 and started shipping in June of that year In October 1977, the company removed the Apple I from its product list and officially discontinued production The Apple II revolutionized the computer industry with the introduction of the first-ever color graphics Sales jumped from $7.8 million in 1978 to $117 million in 1980, the year Apple went public - However, the mid-1980s saw difficult times for Apple However, the mid1980s saw difficult times for Apple Wozniak left Apple in 1983 due to a diminishing interest in the day-to-day running of Apple Computers Jobs then hired PepsiCo's John Sculley to be president In 1983 the company introduced the Apple Lisa for $ 10,000 The product flopped However, this move This is a preview Do you want full access? 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Log in backfired and after much controversy with Sculley, Jobs left in 1985 and went on to new and bigger things Its computer products the Mac I and the Newton were not successful, and the company underwent several CEO changes With declining stock prices, the future of Apple was in jeopardy - Over the course of a few years, Apple's market share suffered slowly after its peak in 1990 and by 1996, experts believed the company to be doomed It was not until 1997, when Apple was desperately in need of an operating system, that it bought out NeXT Software (Jobs' company) and the board of directors decided to ask for some help from an old friend: Steve Jobs Jobs became an interim CEO, or iCEO as he called himself (Jobs was not officially the CEO until 2000) Jobs decided to make some changes around Apple - The return of Jobs introduced a new era for Apple Jobs immediately began to change the company’s corporate culture Before Jobs’ return, employees were more open about Apple projects After he returned, Jobs instituted a “closed door” policy Today Apple continues to remain vigilant in protecting its technology and ensuring information remains proprietary Jobs also created a flattened organizational structure; rather than go through layers y In 2001 Apple launched the iPod- a portable music player that forever changed the music industry The company also introduced iTunes, a type of “jukebox” software that allowed users to upload songs from CDs onto their Macs and then organize and manage their personalized song libraries Two years later Apple introduced the iTunes Store, where users could download millions of their favorite songs for $ 0.99 each online - In 2007 Jobs announced Apple Computer, Inc would be re-named Apple Inc This signified that Apple was no longer just a computer manufacturer but also a driver in consumer electronics The first version of the iPhone became publicly available on June 29, 2007, in selected countries/markets It was another 12 months before the iPhone 3G became available on July 11, 2008 Apple announced the iPhone 3GS on June 8, 2009, along with plans to release it later in June, July, and August, starting with the U.S., Canada, and major European countries on June 19 This 12-month iteration cycle has continued with the iPhone model arriving in similar fashion in 2010, a Verizon model was released in February 2011, and a Sprint model in October 2011, shortly after Jobs' death - The products was made by APPLE : Apple III, Apple IPO, Xerox PARC, MAC, iPod, Iphone, Ipad, Apple TV, iTunes - This opened an era for Apple to transition from a computer to a consumer electronics company II - APPLE’S CORPORATE CULTURE After became a consumer electronics company, Apple faced enormous trammel Although many can only speculate about why Apple succeeded so well, they tend to credit Steve Jobs’ remarkable leadership abilities, Apple’s highly skilled employees, and its strong corporate culture - The question is “ what had Steve Jobs done to overcome all the difficulty and made the company became one of the best companies in the world” First, the concept of evangelism is an important component of Apple’s culture Corporate evangelists refer to people who extensively promote a corporation’s products Apple even had a chief evangelist whose job was to spread the message about Apple and gain support for its products However, as the name evangelism implies, the role of evangelist takes on greater meaning Evangelists believe strongly in the company and will spread that belief to others, who in turn convince other people Therefore, evangelists are not only employees but loyal customers as well In this way, Apple was able to form what it refers to as a “Mac cult”- customers who are loyal to Apple’s Mac computers and who spread a positive message about Macs to their friends and families - Successful evangelism only occurs with dedicated, enthusiastic employees who arewilling to spread the word about Apple When Jobs returned to Apple, he instituted two cultural changes: he encouraged debate on ideas, and he created a vision employees couldbelieve in By implementing these two changes, employees felt their input was important and they were a part of something bigger than themselves Such feelings created a sense of loyalty among many at Apple - Apple Inc.’s organizational culture is a key factor in the continuing success of the business The consumer electronics company’s organizational or corporate culture establishes and maintains the business philosophy, values, beliefs, and related behaviors among employees This business analysis case shows that Apple has a corporate culture that motivates human resources to support various strategic objectives Apple also emphasizes that it does not adhere to the average workday Instead, Apple markets itself as a fast-paced, innovative and collaborative environment committed toward doing things “the right way.” - Apple has their unique approach to able to maintains a positive work culture that keeps its employees motivated ; Creativity and innovation Moderate competition Excellence Teamwork Integrity and Secrecy Through this apple hopes to attract those who fit best with its collaborative culture - In the other hand, Apple also looks for retail employees that work well in its culture Inside the Apple retailers are stations where customers can test and experiment with the latest Apple products Employees are trained to speak with customers within two minutes of entering the store To ensure its retailer employees feel motivated, Apple provides extensive training, greater compensation than employees might receive at similar stores, and opportunities to move up to manager, genius (an employee trained to answer the more difficult customer questions), or creative (an employeewho trains customers one-on-one or through workshops) Apple This is a preview Do you want full access? 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Log in also offers young people the chance to intern with Apple or become student representatives at their schools - Another benefit Apple offers combines employee concerns with those of the environment In an effort to reduce its overall environmental impact, Apple offers incentives such as transit subsidies for employees who opt to use public transportation Its Cupertino facility is equipped with shuttles for employees, including free bus service between the Apple headquarters and the train station Apple’s free buses are powered by bio-diesel.These incentives reduce fuel costs for employees while simultaneously lowering emissions released into the environment III - APPLE’S ETHICS Apple has tried to ensure its employees and those with which they work display appropriate conduct in all situations It bases its success on “creating innovative, high-quality products and services and on demonstrating integrity in every business interaction.” According to Apple, main principles contribute to integrity: Honesty Respect Confidentiality Compliance - To thoroughly detail these principles, Apple drafted a code of business conduct that applies to all its operations, including those overseas It also made available on its website specific policies regarding corporate governance, director conflict of interest, and guidelines on reporting questionable conduct Additionally, Apple provides employees with a Business Conduct Helpline they can use to report misconduct to Apple’s Audit and Finance Committee Additionally, Apple provides employees with a Business Conduct Helpline they can use to report misconduct to Apple’s Audit and Finance Committee IV ETHICALS ISSUES AT APPLE INC 1 Privacy - Consumer tracking is a controversial issue Due to the ubiquity of social network, it is much easier for companies to track costumer Knowing more information about clients is the best way to enhance market its products and understand more about costumers However, apple keep the distance and show respect for the costumer’s privacy Otherwise, a perceived breach in privacy is likely to result in a backlash against the company - In real life experience, Apple faced a backlash in 2011 Apple and Google disclosed that certain features on the cell phones they sell collected data on the phones’ locations Consumers and government officials saw this as an infringement on user privacy The companies announced that users have the option to disable these features on their phones, yet this was not entirely true for Apple Some of its phones continued to collect location information even after users disabled the feature Apple attributed this to a glitch it remedied with newsoftware Both Google and Apple defend their data-collection mechanisms, but many government officials disagree The government is considering passing legislation on mobile privacy, actions that could have profound effects on Apple and other electronics companies Price fixing - In July of 2013, a judge ruled that Apple had conspired to fix prices on electronic books (e-books) in conjunction with five major book publishers A federal judge ruled that Apple was part of a deal that required publishers to give Apple’s iTunes store the best deals in the marketplace for e-books According to allegations, Apple allowed publishers to set the e-book prices for the iPad, and Apple received 30 percent of the proceeds (known as the “agency model”) The agency model is thought to be less competitive than the wholesale model, in which retailers and publishers negotiate on the price However, if a competitorwas found to be selling the e-book for less, Apple was to be offered the same lower price This scheme is more commonly referred to as a mostfavored-nation clause and can beused by companies to dominate the market by keeping competitors out After striking the deal with Apple, publishers then approached Amazon about participating in the contract Apple denies any wrongdoing and association with this deal and plans to appeal the decision Rioting - Because the popular of apple brand and iphone itself, when the iphone 4s released in China there were an enormous crowds were waiting outside for about 48 hours Some of them even camped through night to bought iphone For the time that people couldn’t wait any longer, they began to riot this led to alarm police official They asked Apple not to open the store for safety precautions Customers waiting for the iPhone retaliated by throwing eggs at the store and attacing a mall property manager mistaken for an Apple employee To their dismay, customers were encouraged to purchase the iPhone online or through other authorized sellers Other stores in Shanghai and one other in Beijing opened as scheduled and quickly sold out of the iPhone S Many questioned Apple’s ethics about how they handled this situation and the dangers to customer and employee safety Sustainability - Apple has taken steps to become a greener company, such as reducing its environmental impact at itsfacilities However, the company admits that the majority of its emissions come from its products In 2011 Apple stated its operations contributed to 23.1 million metrictons of gases being released While percent came from its facilities, 98 percent came fromthe life cycle of its products Since Apple’s success hinges on constantly developing and launching new products, the environmental impact of its products is a serious issue One practice for which some consumers have criticized Apple is planned obsolescence— pushing people to replace or upgrade their technology whenever Apple comes out with an updated version Since Apple constantly releases upgraded products, this could result in older technology being tossed aside Apple undertook different approaches to combat this problem For one, the company strives to build products with materials This is a preview Do you want full access? 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Log in suitable for recycling It alsotries to build products that last, along with recycling responsibly To encourage its customers to recycle, Apple created a recycling program at its stores for old iPods, mobile phones, andMac computers Consumers that trade in their old iPods can receive a ten percent discount on a newer version Consumers recycling old Mac computers that still have value can receive gift cards Apple partners with regional recyclers that comply with related laws Despite this recycling program, many consumers feel tossing out their old products is more convenient, particularly if they have no value E-waste remains a significant issue as long as consumers continue to throw away their old electronics - When apple removed 39 products from Electronic Product Environmental Assessment Tool (EPEAT) rating system Many consumers felt Apple might be embracing less eco-friendly products or it was touting itself as being more ecofriendly than it really was Many large buyers such as the city of San Francisco threatened to drop Apple compuers as a result Apple rejoined the EPEAT rating system after consumer feedback indicatedthat dropping the system was a mistake With sustainability becoming a major concern for many buyers, Apple must carefully anticipate consumer reaction before implementing similar changes in the future Intellectual Property - Intellectual property theft is a key concern at Apple, an issue the company aggressively pursues Apple is serious about keeping its proprietary information a secret to prevent othercompanies from stealing its ideas This led to many lawsuits between Apple and other technology firms In 1982 Apple filed a lawsuit against Franklin Computer Corporation that impacted intellectual property laws Apple alleged Franklin was illegally formatting copies of Apple II’s operating system and ROM so they would run on Franklin computers Franklin’s lawyers argued that portions of computer programs were not subject to copyright law At first the courts sided with Franklin, but the verdict was later overturned The courts eventually determined that codes and programs are protected under copyright law This law provided technology companies with more extensive intellectual property protections - Another notable case was Apple’s lawsuit against Microsoft after Apple licensed technology to Microsoft When Microsoft released Windows 2.0 , Apple claimed the licensing agreement was only for Windows 1.0 and that Microsoft’s Windows had the “look and feel” of Apple’s Macintosh graphic interface system (GUI) The courts ruled in favor ofMicrosoft, deciding the license did not cover the “look and feel” of Apple’s Macintosh GUI Although there were similarities between the two, the courts ruled that Windows did not violate copyright law or the licensing agreement simply by resembling Macintosh systems - Apple faced another trademark lawsuit from Cisco Systems in 2007 Cisco claimed Apple infringed on its iPhone trademark Cisco owned the trademark since 2000 Apple and Cisco negotiated to determine whether to allow Apple to use the trademark However, Apple walked away from the discussions According to Cisco, the company then opened up a front organization, Ocean Telecom Services, and filed for the iPhone trademark in the United States Some stakeholders saw Apple’s actions as a deceptive way to get around negotiation procedures The lawsuit ended with both parties agreeing to use the iPhone name However, Apple’s actions in this situation remain controversial The most recent case came in the form of a lawsuit between Samsung and Apple Apple’s claim was that Samsung infringed on multiple intellectual property rights, including patents, trademarks, user interface, style, false designation of origin, unfair competition, and trademark infringement Specifically, Apple claims Samsung used key features of its iPhone and iPad, including glass screens and rounded corners, along with many performance features and physical similarities A jury found Samsung guilty of willfully infringing on Apple’s design and utility patents Apple was awarded $ 1.049 billion in damages, and Samsung’s allegations of infringement against Apple were dismissed within the United States - The ethical issue is if Apple’s claims are legitimate Is it pursuing companies it honestly believes infringed on its patents, or is it simply trying to cast its competitors in a bad light so it can become the major player in the market? Although it might seem Apple is too aggressive, companies that not set boundaries and protect their property can easily have it copied by the competition, which can then be used to gain a competitive foothold It is up to the courts to determine whether Apple’s allegations have any validity Threat to other company - In 2007, there was a document said that former CEO Steve Jobs allegedly threatened former CEO of Palm Edward Colligan with patent litigation if Palm did not cease and desist poaching valuable Apple employees Jobs suggested each company shouldrespectively comply with the idea of not taking valuable employees away from other companies This “unspoken agreement” seems to have also included companies such as Adobe, Google, Intel, Intuit, and Pixar This document came to light because of lawsuits pursued by former Apple employees Jobs’ firm stance on the matter was made clear to Colligan,who countered with a response that Apple’s employees were fair game and this type of collusion was highly unethical In 2010, the U.S Department of Justice filed an antitrust lawsuit against the aforementioned companies and required them to dissolve this agreement Current CEO Tim Cook made it clear Steve Jobs was the only one with knowledge to this agreement and no other Apple employees were involved Supply Chain Management Issues - As mentioned earlier, Apple makes each supplier sign its supplier code of conduct and performs factory audits to ensure compliance In addition, Apple says it has trained over million workers about their rights, increased the number of suppliers it audits by 80 percent, and allows outside organizations to evaluate its labor practices However, in the last few years serious supply chain issues threaten to undermine Apple’s status as a highly admired and ethical company Apple became more and more This is a preview Do you want full access? 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Log in worldwide known for one of the best electronic devices This result in increased rapidly in demand from apple’s costumer Moreover, products from company must be readily available For Apple, most of these products are produced throughout Asia, but more specifically within Foxconn factories in China In the past, multiple accusations pertaining to improper working conditions, underage labor disputes, and worker abuse (that resulted in suicides) have come into question Apple has been labeled as an unfair sweatshop, and critics launched multiple campaigns against the company This resulted in negative publicity from protestors, who asked current Apple consumers not to support Apple’s unlawful practices by purchasing its products Additionally, despite its attempt to audit its factories and enforce strong supplier compliance standards, over 50 percent of the suppliers audited by Apple violated at least one part of its supplier code of conduct every year since 2007 Suppliers claim Apple’s manufacturing standards are hard to achieve because suppliers are allowed slim profit margins In contrast, competitors like Hewlett-Packard allow suppliers to keep more profits if they improve worker conditions According to suppliers, Apple’s focus on the bottom line forces them to find other ways to cut costs, usually by requiring employees to work longer hours and using less expensive but more dangerous chemicals - In this environment, mistakes and safety issues become more common According to the company’s own audits, 62 percent of Apple’s suppliers did not comply with working hour limits, 35 percent failed to meet Apple’s standards to prevent worker injuries, and 32 percent not follow hazardous-substance management practices Other problems with Apple’s supply chain include underage workers, falsified records, overcrowded worker dormitories, and other labor violations Apple claims suppliers who violate company policies have 90 days to address the problem, but fewer than 15 suppliershave been dropped for violations since 2007 - In January 2010, over 135 workers fell ill after using a poisonous chemical to clean iPhone screens In 2011 aluminum dust and improper ventilation caused two explosions that killed people and injured 77 Additionally, over a dozen workers committedsuicide at Apple supplier factories Much of the media attention focused on the conditions at Foxconn, Apple’s largest supplier with a background of labor violations Foxconn continues to assert it is in compliance with all regulations - Some blame the factory conditions on Apple’s culture of innovation and the need to release new or improved products each year, which requires suppliers to work quickly at the expense of safety standards However, the Foxconn factory is one of only a few facilitiesin the world with the capacity to build iPods and iPads, and that makes it difficult for Apple to change suppliers Additionally, inconsistent international labor standards and high competition mean that virtually every major electronics producer faces similar manufacturing issues As media and consumer scrutiny increase, Apple must continue to address its supply chain management issues However, as one current Apple executive told the New York Times , customer expectations could also be a problem since customers seem to care more about the newest product than the labor conditions of those who made it  CEO Tim Cook visited Foxconn personally to see about labor conditions Apple worked with Foxconn to improve worker safety, including testing more equipment and improving workers’ hours The Fair Labor Association (FLA) states that Apple has dramatically improved the accountability of Foxconn and completed 280 of theFLA’s recommendations It appears Apple is improving its supply chain practices However,continual monitoring of its suppliers and enforcement of ethical standards are necessary to assure stakeholders that Apple takes the well-being of workers in its supply chain seriously V - THE FUTURE OF APPLE INC Apple has its share of threats It constantly faces lawsuits from various competitors over alleged intellectual property violations Additionally, although Apple’s aggressivestance helped protect its intellectual property, its tight hold over its products and secretcould be disadvantageous as well Google, for instance, has a more open-source approach.It has shown great support for the open-source movement, which advocates opening software and software codes in order to secure more input from outside sources Although thisopenness increases the risks of intellectual property theft, it allows for innovation to occurmore rapidly because of additional collaboration Google’s Android phones are beginning to gain market share as a formidable competitor to Apple’s iPhones Apple may eventually need to re-examine whether its closed system is the best way to compete - The most recognizable threat seen around the world was the death of Steve Jobs In October 2011 Apple Inc lost one of the most important aspects to its company Withthe passing of Apple founder and CEO, eyes are now turned to CEO Tim Cook Tim Cookwas Apple’s corporate operations officer for many years before becoming CEO Cook takes a more traditional approach in his management style by prioritizing project and supplychain management over creative engineering, attending investor meetings, being accessible to the media, and paying out dividends to stock holders, among other activities Hestill maintains the secretive nature of the company but appears to be more approachable than Jobs - Yet while Cook seems to possess the skills necessary for the CEO position, some fearhe lacks the creative skills that made Jobs such a visionary Jobs was considered to be a “creative builder,” able to recognize consumer needs and develop revolutionary productsto meet these needs in dynamic ways A major concern is that Cook does not possess these skills This prompted many to question whether Cook’s leadership might change Apple’s culture negatively On the other hand, others feel Cook could make Apple more competitive with his strong strategic management skills The change in tone of the company isthe big difference between the leadership styles of Cook and Jobs and will likely have a profound impact on the firm In the last decade, Apple has excelled at keeping pace with the quickly evolving industry of computers and This is a preview Do you want full access? 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Log in consumer electronics Although skeptics have raised questions in the latter half of 2013 on whether Apple is still the driving force behind innovation,many believe new products are on the horizon Its diversification, collaborative corporate culture, and product evangelism propelled it to heights that could not have been envisioned when Jobs and Wozniak sold their first computer kit in 1976 Although Apple experienced many challenges along the way, the company has clearly showcased its ability to understand consumers and create products that have been implemented and used in customers’ everyday lives Question 1: Explain how Apple’s philosophy and organizational culture have impacted how it handles ethical decisions? - Apple credits their highly successful company to practicing integrity in all aspects of their business while they are creating their high innovative and in demand products Apple strives to embody the attributes of being an honest, respectful, compliance, and confidential company When Steve Jobs return to Apple, he instituted two cultural changes: he encouraged debate on ideas, and he created a vision employees could believe in By implementing these two changes, employees felt their input was important and they were a part of something bigger than themselves Such feeling created a sense of loyalty among many at Apple - Apple handles their ethical decisions based on practicing their philosophies of honesty, respect, compliance, and confidential based on their integrity Apple has been involved in multiple lawsuits regarding property rights, violations of privacy, and labor violations They handled the lawsuits by sticking by their principle values of confidentiality and respecting their employees and wanting to make the labor violations comply to labor laws to fix their ethical dilemmas Question 2: Why is Apple’s industry so competitive and how could this affect the ethical risk in Apple’s operations? - Due to Apple’s history as one of the most popular tech companies in their industry they are put into a position where they must be able to set themselves apart from their competition - Apple industry is the consumer goods technological sector This sector is very competitive because it tends to be very profitable, which means that it attracts a large number of skilled entrepreneurs and wokers who create high quality products that customers demand - In a world of copyright and infringement, ideas can be easily stolen It is crucial that Apple puts high importance to the internal protection of their intellectual property so that their ideas are not taken and manipulated to appear set apart from theirs but remain similar enough to become competition The iPhone's success has skyrocketed through the years and the product is constantly in high demand Apple has practically reinvented the way that the consumer sees and uses their computers and laptops through their branding - Because of this, Apple faces several ethical risks: for one, it faces the risk of not practicing predatory pricing techniques like dumping in order to drive out competition, because this would be unfair not only to the other firms, but also to the other companies For example, in the case that Apple’s use of the domain name iTunes.co.uk which had already been registered by Ben Cohen in 2000, who use the name to re-direct users to other sites Apple attempted to purchase the domain name from Cohen but when negotiations failed the company appealed to UK registry Nominet This led to Apple won the right to use the domain name, which led to complaints that Apple was being favored at the expense smaller companies - Apple has competitors in that other people make computers, smartphones, tablets, watches, and other Apple products, but they don’t have any competitors in that no one else can offer an experience like Apple So if people want the Apple experience, which millions of people do, they have no choice but to go to Apple This led to the product has been in extreme demand, regardless of the device’s price Apple is not perfect however, they have a history of misconduct that fails to address the risk that is within their supply chain, and not to forget that the production cost of their devices is extremely low and sold at a high profit Another ethical risks would be more relevant for managers, and that is that managers should avoid to overestimate their ability to increase profits, because this may create false expectations on the board, on stockholders, and on the customers, leading to malinvestment, and other negative eocnomic consequences Question 3: How you think Apples has handled the various ethical issues that in has faced in the past? - Although Apple’s company had faced some ethical issues in the past, I believe that they are now able to handle some of it Apple’s companies has no longer using toxic chemicals of any source to create it products Furthermore, Apple’s companies has created a recycling program that use of damaged product to create a new one to prevent toxic waste and also implies that Apple has put a deep focus in environmental Moreover, Apple’s has some actions to stay out public outcry’s such as reduce carbon emissions and provide free rides to their employees This also prove ethical is well alive in Apple’s companies