Apples Ethics And Supplier Code Of Conduct

Apple, Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. Apple surpassed the software giant Microsoft, in May 2010 and secured the reputation of the largest and one of the most valuable companies of the era. The company operates 301 retail stores scattered across ten different countries as per August 2010. It’s traditionally well known for its Mackintosh line of personal computers. As years passed by, Apple has gained a significance amount of reputation in the global market by the introductions of products such as iPad, iPhone and the latest introduced iPad. The following throws light on Apple’s supplier responsibility program, its code of ethics and also the controversy it was recently involved with electronic leader, Foxconn.

Company Perspectives

Apple Inc. is devoted to creating the finest music and personal computing experience for every single one of its users, from students to educators, business professionals to government officials and other consumers by means of ground-breaking hardware, software, internet offerings, peripherals, and services.

Apple’s business approach powers its distinctive ability, through the design and progression of its personal operating system, hardware, and countless technologies and software applications, to provide its customers with the latest creations and simple solutions through outstanding innovative industrial design.

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Company History

Before being able to produce some of the finest computer products we have nowadays, Apple went through countless processes and hurdles. Apple was established in 1976 by two college dropouts, Steve Jobs and Steve Wozniak. Also part of the team was Ronald Wayne, who was older and had personal assets of his own. Wayne’s uncertainty of the company worried him about the risk of investing his assets, and resulted with him selling his share back to Wozniak and Jobs for $800. That same share of the company would be worth over 3 billion dollars today (Linzmayer, 2011).

The main objective of starting the company was to sell their first invention, The Apple I, which took place on January 3rd, 1977. It was successful for use at the time as it only included the most important parts: a straightforward motherboard plus CPU, RAM and very simple textual-video chips. Only a few months later, The Apple II was released during April, 1977. By the end of 1978, the United States saw Apple to be one of the fastest-emerging companies having its products available through 100 dealers. Apple’s development continued to grow with more and more developments and by December 1980, the company went public. Within only minutes, 4.6 million shares were sold at $22 each (Linzmayer, 2011).

The company was formerly recognized as Apple Computer Inc., for the first 30 years, but later removed ‘computer’ from its name to reflect its expansion into consumer electronics and wanted a better portrayal as a lifestyle powerhouse rather than just personal computers. It continued to produce some of its popular products today including the Macintosh line of computers, iPod, iPhone and the iPad. Apple’s attitude towards comprehensive artistic design as well as its unique advertising operations is just a few of many reasons why the company has created a distinctive reputation in today’s computer industry (Linzmayer, 2011)

Products

Apple’s super stylish and exclusive product line has allowed it to create a distinct name for itself. Some of the popular Apple products include:

iMac

It is the vibrant and stylish all-in-one Macintosh desktop computer that offers a variety of features including a very rich desktop experience. The first model of the iMac that was released was the G3, and the latest iMac released towards the end of 2009. The new iMac comes with a smooth, professional look that redefined Apple’s known all in one model.

iPod Touch

The main turning point for Apple’s iPod line was the iPod Touch. It has been a massive success and customers are loyal to this brand as the company continues to update the device with the latest features. iPod Touch 3G is the latest of the model.

iPhone

The entire smart phone industry was revolutionized on June 29, 2007 when the iPhone was released. It was labeled by many to be the year’s best invention. Since the launch of the iPhone 4, 3 million units have been sold. Within the first weekend, 1.7 million were sold.

iPad

The product causing a lot of today’s buzz is the iPad. 300000 units for sold on day one. It would be classified somewhat between a phone and a laptop. Users no longer have to choose between toys or tool as the iPad has all the technologies and features for both work and fun.

Apples ethics:

Controversies exist whenever a firm becomes big. We cannot really judge the actions of a firm as it’s just not one person who is in control. A firm consists of ethical and unethical employees. One of the most famous ethical dilemma’s faced by apple was the Foxconn case. We would be looking at what apple has done to fix it in the next segment while right now we would be looking at some of the ethical and unethical practices at apple. Apple has raised its ethical standards due to a lot of pressures by outside parties. Apple was not considered ethical due to the issues that arose in china. However there were ethical standards that applied to people working at apple as it didn’t flourish and become a billion dollar company just like that (Hyatt, 2010)

Ethical codes of conduct are the basis of a company a company cannot exist without it as there would be no direction, motivation or discipline. Apple has separate ethical standards for employees at different rankings due to the fact that every position requires something different and each has specific criteria. Apple targets reasons that lead to unethical behavior and works on them so that they don’t arise in the company. The code focuses on: Conflicts of interest, confidentiality, proper use and protection of the company’s records and assets, insider trading, fair dealing, and reporting of illegal and unethical behavior .All the points are self explanatory. One of the main things that are encouraged at apple is feedback. Supervisors are expected to help workers understand and require them to provide feedback as it not only helps the supervisor understand the areas at which the workers lacks comprehending but also encourages and in turn motivates them (ILO, 2008). While the responsibility of officials like the president, chief executive officer and senior financial officers is to make sure that the company runs in accordance to the legal requirements and also to make sure that each violation is dealt with in an appropriate manner so as to make sure that the mistake is not made again (ILO, 2008).

Apple is constantly changing so its policies get updated. It applied a policy called ranking and rating in which the sales metrics of the employees were hung up so that everyone could see. Even though the salary of the employees was not commission based it helped senior officials, as they could now see which workers weren’t selling much (Spence, 2010). The officials then tried looking for the root cause of the problem and provided training to those workers. This was one approach by apple to motivate but obviously some critics did think that it is not very effective. But the idea of trying and coming up with ways to make this better should be admirable (Hyatt, 2011) 

Apple’s supplier code of conduct: “Apple is holding suppliers accountable”

The reputation of apple has been drastically bruised due to its suppliers. Foxconn is one of the major supplier of apples products and the management practice there was put into the spotlight when workers started committing suicide. Steve Jobs was put a lot of pressure due to this as the public demanded an answer. He responded to this by the formation of a detailed supplier code of conduct. It covered expectations in these areas: management systems, labour and human rights, impact on the environment, ethics, health and safety (Hyatt, 2011).

Management systems: Workers are required to be trained and well informed. It should be made sure that they provide feedback. Third party audits to eliminate chances of fraud and also to implement new and improved policies. A corrective action process in which mistakes are corrected and the process is then again followed up (Hyatt, 2011). Documentation and records are required to be checked by the management regularly and company policies are to be applied to the suppliers (Spence, 2010).

Labor and human rights: Suppliers should make sure that they do not discriminate labor on the basis of things like sexual orientation or race. They should not hire underage workers, provide benefits and incentives, protect juvenile workers, be fair in treatment and do not require them to work for long periods as this is the main cause of strain and demotivation. Works should also not be required to pay large sums of money to employment agencies and wages should be sufficient.

Impact on the environment: Suppliers are required to take permits when dealing with something that requires permission from the government. They should also dispose of their air, water and solid waste in such a manner that it doesn’t harm the environment. And make sure that they do not dispose of toxic or hazardous substances (Hyatt, 2011).

Health and safety: Workers should not be required to do things would be looked at as a health or safety risk for them. They should be given proper food as well as living space. There should also be worker health and safety committees on the premises (ILO, 2011)

Ethics: Important documentation should be protected and there should be a degree of conditionality between the company and the supplier so they can easily disclose information to one another. Complaints should be taken into account and action should be taken immediately.

Foxconn International Holdings Ltd.

Foxconn International Holdings Ltd. is a multinational subsidiary of Hon Hai Precision Co Ltd., a Taiwanese company that is the world’s largest maker of electronic components (The Circuit Assembly Top 50 EMS Companies, 2009). According to the 2010 Fortune Global 500 Companies, Foxconn secured the 112th rank overall earning a profit of 2,291.7 and revenue of 59323.9 million dollars (Fortune Global 500, 2010). The company’s primary focus was on providing vertically integrated manufacturing services for the handset industry. Foxconn’s employee count reaches more than half a million in China alone (Eyck, 2010).

The founder of the company is Terry Gou, a billionaire, and has made Foxconn the world’s largest manufacturer of printed circuit boards spreading all over Asia, Europe and America. The majority of the company’s sales to Asian customers is attributed to the People’s Republic of China. The operational activities of the company are primarily located in China, then the United States, Mexico and other countries (Buetow, 2010).

Foxconn Controversies

Foxconn in the recent past has been involved in manufacturing in large quantities products for Apple viz., the iPod, iPad and the iPhone. Being one of the most renowned companies in the world, Foxconn has been involved in controversies mainly on how to manage employees (Jones, 2010). These initiated with the set-up of the Apple factory in Shenzhen, China. Apple was all over the news around the first week of Feb ’10 not only for its sensational launch of the iPad, but also because of the high number of worker suicide in its Foxconn factory.

Amidst all this, 12 Foxconn workers have already ended their lives this year, by jumping of the multi-story dormitories they live in or from the building during the very short duration of rest which they were given (Eyck, 2010). This crisis has urged the company to install safety nets in between the buildings as 20 more were stopped from killing themselves by the company authorities. At Longhua, there was a highly charged. This is because approximately 350,000 workers eat and otherwise live there, and during their protests, they had started chanting an insulting chant at Foxconn. The president of Foxconn, after heavy negotiations, said that the company would plan to move a significant portion of its workforce to a Western part of China, where they will be closer to their families. The case had become so out of control that the people who lived on the company premises had started calling the factory a Death Express. Management also had taken some steps toward controlling this phenomenon, such as creating a suicide hotline, and bringing monks to counter forces of evil.

The Foxconn Empire employs about a million people, in the city of Shenzhen, across the city of Hong Kong. The premises of the industry contain 15 manufacturing buildings and they have dedicated one building to each customer. It was in these buildings where the suicides took place. The company made public a statement where it said that they have avoided a further 20 suicides. Steve Jobs, the CEO of Apple upon hearing about the tragedy said that he found this incident very troubling and also mentioned that Apple always strives to provide the best jobs in a company with regard to understanding the working condition under the company’s supply chain. There has been an alarming increase in the number of suicides, whose reasons are still not apparent. The culture of the workforce at Foxconn has been described as being run similar to a military. (Moore, 2010).

Foxconn’s Unethical Management – Working conditions

The main reason for Foxconn being under the spotlight was because of its unethical management and working conditions which has been considered as the root cause of the deaths and suicides in the past one year. A report recently explains the toiling and the exhaustion caused by 12-hour shifts, workers prohibited from talking or interacting with co-workers and the pressure of just-in-time production in order to meet the high demand (Eyck, 2010). SACOM held a protest on the 8th of June which was the same day Apple launched its iPhone4. The demand of the protests initiated by the activists was to boycott all the Foxconn products (Eyck, 2010).

Furthermore, a Chinese undercover team, filtered through the Longhua plant and gave the reporters they entire scenario of the industry. They reported by stating that the facilities were adequate but highly criticized their management. Hundreds of people work in the workshops and did not have the permission to even talk to their colleagues.. If so found, they would get a black mark on their record, be shouted at by their manager or even be fined. The report was followed adding Foxconn’s laying off of more than ten thousand workers due to the financial downturn and had been pressured to meet up with the demand for the Apple iPad due to its monumental success (Moore, 2010). The iPad appears to have placed immense strain on Foxconn workers which resulted in them in quitting jobs at the rate of 15,000 a month (Robins, 2010). The workers in the factory need practice to become really efficient and the new staff has to keep up.

The workers that were asked about the working conditions stated that their hands would still keep on twitching when they are not working and mimic the motion as they were not able to relax their minds (Chang, 2010). The workers worked for an average of 120 hours per month, exceeding the limit set by Apply by 70 hours (Moore, 2010). Foxconn management style was regarded as severe and obstructed the code of ethics for managing employees. Apple therefore was urged upon to take appropriate steps if they were concerned about the health and safety of the workers (Crothall, 2010).

Nevertheless, Apple has taken this issue into strict consideration and has urged Foxconn to do the same. These tragedies threw a very undesirable spotlight on the labor practices of Foxconn. After a few months of this incident, Foxconn has pledged to enhance work conditions, increase the pay, take into consideration of allowing workers to live closer to their homes aswell as reduce overtime hours.

Conclusion

Apple Inc. regardless of the recent controversies with Foxconn has reacted well and taken action in this regard under the guidance of Steve Jobs. After tremendous pressure from the labor organization in China, Steve Jobs has given this matter of utmost importance and high priority. Nevertheless, the situation in the province of Longhua has shown to improve. The Labor Department has agreed upon increasing the wages and to provide better facilities to the workers all around. Apple has lived up to its reputation of living up to its strong supplier responsibility program and its supplier code of conduct.