Apple has been embroiled in issues related to the company’s ethical and social responsibilities. Recent reports about inefficiencies and suppliers’ non-compliance with the ethics and social responsibility code has raised a lot of public attention (Chen, 2013). While the media has been putting Apple on the spotlight, legal experts may argue that Apple has no direct responsibility for their suppliers’ possible ethical misconduct and non-compliance.
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In a recent supplier responsibility report, Apple reported that all its manufacturers were trying as much as they could to ensure they comply with all codes and improve working conditions in their manufacturing plants (Barboza, 2011). In the light of the recent suicides, deplorable work conditions and poor wage policies, Apple has stepped up its efforts to ensure that its conglomerate of manufacturers comply with its supplier Code of Conduct (Chen, 2013).
In its 2014 Supplier Responsibility progress report, Apple asserts that all employees have the right to secure, safe and ethical work conditions and that its staff are on the forefront. The company has established what it says to be the toughest and strictest code in the electronics industry, and that it has continued to make it even stronger to meet the emerging supplier challenges.
Apple has been fast to perform thorough audits at shorter intervals to determine whether its supply chain and suppliers comply with the regulations. In addition, Apple understands that it is not easy to be fully compliant or make their suppliers achieve the highest compliance levels with follow up or action plans such as audits alone (Stainburn, 2013). To address this challenge, the company has been keen to drive its suppliers to achieve up to 95% compliance. The company is now shifting from handling things as they come to tackling the root causes and systemic issues to curb similar ethics and responsibility issues before they arise.
The impact that the publication of ethics and social responsibilities violations made by Apple’s suppliers has had on Apple’s reputation
Apple has had a fair share of negative publicity following reports of bad labor practices such as underage labor, forced overtime and violations of minimum wage, not to mention unsafe worker conditions in its Chinese manufacturer (Barboza, 2011). Supplier malpractices have damaged Apple’s position as a market leader posting over $13 billion in profits only in the first quarter of the year (Porter, 2012).
The Consumer pressure has drove Apple to make huge changes in its Supplier Code of Conduct that is audited and monitored almost regularly. Apple is reported to be the first mobile company to be a member of the Fair Labor Association, an organization that monitors working conditions (Porter, 2012). These actions have been quick-fix steps to seal the already torn garments that have been in the public domain.
Establishment of training programs for all workers in the manufacturers is indicative of the impact that bad publicity has had on the company’s reputation. To turn its image around, Apple has tried to come out clean saying it was working to make sure that its suppliers achieve 95% of standard worker conditions (Porter, 2012).
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Methods that Apple can utilize to ensure that its suppliers adhere to wage and benefits standards going forward
Apple believes that every worker has a right to better remuneration. In line with good HR practices, Apple has been making significant progress in making its suppliers comply with this requirement. However, the company needs to up its game through employee awareness programs that can help workers in supplier plants to raise their concerns with boldness and courage.
Many employees at the manufacturing plants are unable to raise burning issues or lack proper channels of escalating problems to the right authorities. Therefore, it is crucial for Apple to enroll as many employees as possible in a strong employee rights awareness program. Experts believe that a comprehensive employee training on rights and privileges can have a far-reaching impact on the wellbeing of the staff (Porter, 2012).
Secondly, by encouraging its suppliers to respect international labor laws and regulations, Apple can be able to help workers obtain wages that are commensurate with the type and magnitude of work they do. While it would be difficult for Apple to achieve this goal through a contractual agreement, Apple can establish measures to ensure that working hours are in line with the wages that workers draw.
Unfair wages arise when an employer allow employees to work more hours with low pay rates. For instance, employees have had issues with working for over 60 hours in most of the Apple plants (Klein, 2011). In addition, the problem of overtimes remains top on the agenda of Apple. To help workers who make Apple grow its business, Apple can begin to track the number of hours that employees attend at the suppliers’ manufacturing plants (Klein, 2011). The mere fact that Apple will be publishing this kind of information about its suppliers can go a long way in eliminating unhealthy labor policies while ensuring that employees earn salaries and wages that are commensurate with their effort.
Though this initiate can be difficult for Apple, especially because of the challenges in predicting changes in work plans, Apple can require all its suppliers to give early notices when the suppliers anticipate that production plans will be changing. In this way, Apple will be able to forge ahead together with suppliers (Stainburn, 2013). Apple should come up with a framework requiring suppliers not to charge recruitment fees for qualified contract employees who are assigned to work on its projects. In order to ensure that the practice is applied indiscriminately, Apple and the suppliers will be able to reduce the burden of paid fees and increase the overall wages for all workers.
Would Apple’s customers be willing to pay more for its to provide better wages and benefits for suppliers workers?
However, it is expected that a new twist will immediately change this position when argued from the point of view that incremental prices are meant to increase wages for its workers.
First , customers in the electronics industry are savvy and knowledgeable, so they understand that it is the responsibility of the company to work its way out and present better wages for its employees (Stainburn, 2013). This means that while it is important to note that wage increment is indisputably welcomed by the customers, it may not be a reason sound enough to justify overpricing of products.
Given that Apple is a giant company with a visible footprint on the market, and appreciating that the company has made serious progress in terms of profits, many customers would be skeptical about premium prices. The argument could be that the company has not made significant losses that warrant price increases for the sake of paying off its employees (Chen, 2013).
From a legal standpoint, the whole proposal would be trashed given that Apple is not legally responsible for suppliers’ non-compliance of labor practices. Perhaps the most important thing to note is that the Apple can only have a renegotiated contractual agreement that would allow suppliers an extra income that can cater for additional wages.
Apple’s current overall marketing response and actions that Apple can take in order to improve its competitive advantage in the global marketplace
As a market leader with a footprint on the global computers and phone market, Apple has remained the subject of competition from other industry giants such as Dell, HP, Samsung and more. Operating amidst controversial labor, health and corporate practices, especially by its suppliers, Apple has received significant publicity at least on the negative side (Klein, 2011).
However, Apple has been able to counter its adversaries and develop a strong brand. The strategic marketing plans adopted by Apple have been unique from the rest of the players (Seel, 2012). First, Apple rides on its assertion of quality for money and knows that producing products that are sold at premium prices can be significant in turning around its profit base. The price premium spans Apple’s product portfolio, including its signature products such as iPod, Macintosh, iPhone and computer &telephone accessories. Apple has come out strong in positioning itself to appeal to a reliable customer base that is less sensitive to price. Realizing that they have a formidable customer base that could drive its culture of high quality products, Apple has been able to make its position of component quality known to the market (Seel, 2012).
Apple leverages a solid and efficient supply chain that cuts across the globe. The company benefits from the advantages of the releasing advanced products such as iPhone and iPod that feature numerous characteristics such as touch screens and quality flash memory. These features have been able to make iPhone and iPod prices to go below what other competitors offer.
Giant and rival companies in the industry such as Samsung run their marketing campaigns in different market segments that one would expect that it would beat the market. Because of affordable and reliable technology, Apple has been able to remain on top of the game disallowing other players to compete favorably in the short- and long-term. Using the pricing model adopted by Apple for all its signature products and accessories has served to show Apple’s products as a company to buy from (Porter, 2012).
The other strategy that Apple uses is the hybrid distribution channel to navigate the volatile and competitive environment. The channel integrates physical outlets, online store, and exclusive service provision and retail points. The fact that Apple has multiple channels through which it communicates and distributes its products seamlessly means it cannot be possible for another company to move near Apple’s product distribution channel (Seel, 2012).
Apple has established a new segment involving students to help influence brand preferences during the early days of product development. This strategy has been successful in influencing new users and new technology adopters on the bandwagon.
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Apple’s “jobs-led” initiative makes up the company’s fourth marketing mix. Apple continues to build a vibrant consumer base by establishing new retail outlets that operate across the world. By stocking iPhones and iPods in virtually all retail outlets, Apple has been able to reach out for all customers. Additionally, e-commerce websites such as Amazon and Apple’s website have made Apple’s product easy to purchase.
Barboza, D. (2011). Workers Sickened at Apple Supplier in China. New York Times. Web.
Chen, M. (2013). More Bad Apple: Watchdog Exposes New Chinese Factory Abuses. The World Post. Web.
Porter, E. (2012). Dividends Emerge in Pressing Apple Over Working Conditions in China. New York Times.
Klein, P. (2011). Where Is Apple’s Social Purpose? The Fobes. Web.
Stainburn, S. (2013). Apple supplier Pegatron ‘worse than Foxconn’: China Labor Watch. Global Post. Web.
Seel, P. (2012). Triple-Profitability-Bottom Line: Supplier responsibility in a multistakeholder perspective and the power of the markets in the Apple-Foxconn case. Web.