Current Position on Ethics and Corporate Responsibility
Apple Corp. is one of the largest design, manufacturing and seller of mobile and communication devices globally, including some of the world most popular models, such as iPhone, Mac and Apple TV. Company business model offers several retail channels that include own physical stores, retail stores and cellular network retailers and online sales. Net sales for fiscal year 2012 reached as high as USD 156 mln, reflecting 30% growth comparing to the same period of 2011. Company´s financial figures reflect continues improvement on profit margins that have grown 58% between years 2011-2012 (United States Security and Exchange Commissions, 2012). Such financial and reputational position on the market not only talk in favor of the successful business model, but place a lot of emphases on company reputation as a member of a community as well as employer. With that in mind Apple makes a lot of efforts to develop, implement and communicate sustainable Corporate Strategy and Social Responsibility business model.
Communication of the Corporate and Social Responsibility Strategy is done through several channels, bi-annual meetings of Board of Directors and Apple Inc. shareholders and Annual Report on the topic, communicating issues, challenges and performance against core strategic goals. The core of the Corporate Responsibility strategy for Apple Inc. is fair and sustainable working conditions for Apple Inc. employees as well as its suppliers. With that in mind, company places emphases on the choices made within its upstream relationships, working with “Green supply” and organization whose Corporate Responsibility standards meet Apple Inc. requirements and Apple’s Supplier Code of Conduct. Some of the findings from the latest Supplier Corporate Responsibility progress Report 2013 reflect current company position on addressing the issues of excessive working hours, working empowerment training and Supplier Employee Education and Development Program. The results of the annual audit reflect improvement in compliance figures in regards to the working hours conditions, that reached 90% on average in 2012, showing improvement of 7% relative to 2011 results (Apple Inc, 2013).
Some business critics believe that, with the Steve Job´s death, the company demonstrated that it is willing to take certain steps to change its vision and incorporate Corporate Social Responsibility (CSR) policies into its vision. Chun (2011) argues that success of Apple Inc., is attributed not to its top notch product only but also to the fact that it does not sell a product, but actually the vision that it manages to pass to its customers and reach impressive customer loyalty (Chun, 2011).
Suppliers´ Reputation and Its Impact on Apple Corp.
What is it about the suppliers’ relationships that actually impacts Apple Inc. business model and daily operations and why Chun (2011) argues that CSR is the greatest opportunity for the Apple´s new CEO? The reality shows that the stakeholder relationships are extremely complex and multitude element of organizational culture and behavior. Customers, suppliers, shareholder, external bodies, competitors and other stakeholders judge, affect and influence organizational success and reputation and. As such, some of the stakeholder roles in the community can interchange or overlap. Customer, for example, can also become and internal stakeholder-employee, while governmental institutions can play a significant role as a supplier. The reason for raising this discussion in this document is simple: the reputation of each party in business relationships affects the outcome of another stakeholder´s activity.
Apple Inc. is a multinational company with the development, manufacturing and retail operations spread globally and, thus, its involvement in the issues and relationships of local communities is extremely high. The level of outsourcing and third-party production is another factor that influences Apple´s ability to control its reputation (Schwartz, 2011). Recent events bringing to international attention and scandal some of the irresponsible practices, conducted by Apple Inc. suppliers prove the argument. One of these scandals at Apple´s plant for iPhone and iPad in China received wide international attention. It was proved that bad working conditions at Foxcon´s factory causes a number of suicides and suicidal attempts (Huffington Post, 2012). Negative media attention resulted in dramatic sales drop, and negative image of Apple Inc. globally.
Apple Upstream Relationships
The latest labor scandals in China and other locations show that well-developed system of supplier CSR control and alignment is only partially effective. Considering that Tim Cook should take further steps in developing robust and well-backed up audit program of Apple´s upstream operations.
It seems that Apple faces several issues with breaking Apple´s Supplier Code of Conduct and legislation. These problems are hampered by the weakness of local law enforcement procedures. Independent bodies, such as labor committees and unions could help significantly in implementing control and supervision over the activities of suppliers in China, India and other locations. There are several steps that could be performed by the management of Apple´s organization itself to address existing issues in more embracing and multi-faceted manner. First of all, as an active community member, the organization should place more emphases on building strong relationships with local authorities and develop joint audit committees. Joint efforts of auditing global suppliers would allow a better understanding of underlining issues in each location by bringing together both, local knowledge and expertise of governmental officials and the expertise and experience of internationally minded auditors.
Second possible method to make suppliers adhere to wage and benefit standards is the implementation of external suppliers´ performance management system. As an integral part of the suggested Performance Management system, Apple should integrate a system of bonuses and fines for suppliers based on the item performance against setting Key Performance Indicators. This will provide suppliers and the corporation with measurable tool and clear set of expectations. A copy of this document can also be provided to the governmental authority that would assist in conducting bi-annual audit of internal operations at suppliers´ plants. Additional benefit of such performance management system is the possibility to make it reasonably unified across geographical locations.
Apple Price for Suppliers´Wages – Personal View
It is common knowledge that all improvements come at a price. The iPhone is a prime product on the market and customers are ready to pay a higher price not only for design and options that this device offer, but also for the reputations and vision of the Brand. This, without a shadow of a doubt, builds on the overall proposition of Apple and allows the company charging premium price for its products. At the same time, the vision and reputation that Apple developed over the years is a major reason for acceptance of this extra cost. With that in mind, if he company attempts to transfer the cost of creating a reputation to the customer it is very likely that this cost will not be absorbed. There is a very high risk for Apple to incorporate social responsibility costs into the structure of it´s products´ pricing.
On the other hand, Apple is an international company and iPhone, Apple TV and iPad are the products that almost equally popular in Europe, Asia, North and South America. This information is relevant as it allows understanding the scope and diversity of the Apple´s customer base. One could argue that the level of acceptance of additional costs driven by intangible benefits is much higher in Europe than in Asia or South America. This knowledge can allow Apple to conduct further study and understand how the issue of CSR cost in its products can be handled based on regional cultural differences (Van Trijp, Ingenbleek, and Van Tiburg, 2010). That said one of the possible solutions would be to incorporate a differentiated pricing strategy for the product based on the country CSR index (Banse, 2011). This could be done through thorough: a) research of market acceptance and perception of the CSR cost in the product, b) communication and promotion of Apple image as CSR pioneer and, c) measurement of actual response and effect of this strategy.
Apple Marketing Strategy and Recommendations for Improvement
Apple has created numerous debates around first formulated by Steve Jobs theory that users do not always know what they want. This philosophy is at the same time rebellious and controversial and extremely successful as it was proven by the sales track records of the Apple Corporation. There are several very distinctive characteristics of Apple´s marketing that make it a success. First of all, Apple does not follow the competitors and always becomes the first to test the market in terms of options and design of their product. The company managed to turn reasonably pricey, and ordinary communication device into an item of desire. People seek to change and update their Apple device to follow fashion and new features. What is remarkable is that the features that are offered in the next generations of iPhone, iPad and iPod are not necessarily those that we actually wanted. And yet, we look forward to seeign it coming and buy it as long as our funds allow. Secondly, Apple invested a lot into the objective to turn their product into a fashion item by adding incredible design to ordinary content. Thirdly, Apple created strong technical infrastructure around their product that not only extends customer experience, but also makes it almost in substitutable. These marketing tools come along with robust marketing and communication strategy that justifies and explains to the users the value for money.
Second possible suggestion for Apple is to re-evaluate its margin strategy in order to get closer in terms of price to some competitors. One of the examples in this area is the loss of the market share in the United States by iPad Mini to Nexus 7 due to its price (Spence, 2010). Marketing strategy is a sensitive issue, especially at the time of global financial crisis and recovery period. It could be a risk-free and adequate strategy to look at some products with the perspective of mass product with lower margin and higher volume of sales. This strategy could be tested on non-core segment, such as MP3 players and would bring liquidity and higher response to the volatility of the market.
References
Banse G. (2011). ‘Sustainable Development - The Cultural Perspective : Concepts - Aspects - Examples’, Berlin: Sigma Publishing. Print.
United States Security and Exchange Commissions (2012). ‘Apple Inc. Annual Report’. Form 10-K. Retrieved 13 January 2014, http://investor.apple.com/secfiling.cfm?filingID=1193125-12-444068
Apple Inc. (2013). ‘Apple Supplier Responsibility’. Apple Official Web Site. Retrieved 13 January 2014, http://images.apple.com/supplierresponsibility/pdf/Apple_SR_2013_Progress_Report.pdf
Chun R. (2011). ‘Corporate Social Responsibility at Apple. CEO Tim Cooks´Greatest Opportunity. IMD, October 2011. Retrieved 15 January 2014, http://www.imd.org/research/challenges/corporate-social-responsability-apple-opportunity-rosa-chun.cfm
Schwartz M.S. (2011). ‘Corporate Social Responsibility: An Ethical Approach’. New York: Broadview Press. Print.
Huffington Post (2012). ‘Apple, Foxconn Scandal Highlights Exploitation of Chinese Workers By Foreign Firms’. Huffington Post, 3 July 2014, http://www.huffingtonpost.com/2012/03/07/apple-foxconn-scandal_n_1325930.html
Van Trijp M., Ingenbleek P., and Van Tiburg A. (2010). ‘Markets, marketing and developing countries : where we stand and where we are heading’. Wageningen : Wageningen Academic Publishers. Print.
Spence E. (2010). Apple´s Big Decision of Margin or Market Share Drives Strategy’. Forbes,22 October 2010. Retrieved 16 January 2014, http://www.forbes.com/sites/ewanspence/2013/10/22/apples-big-decision-of-margin-or-market-share-drives-strategy/
