The Ethical, Social Responsibility, and Marketing Strategy of Apple Corporation Tyesha Martin Strayer University

The Ethical, Social Responsibility, and Marketing Strategy of Apple Corporation Our generation today has become to be known as the “Generation of Technology”, where smartphones and laptops are a necessity instead of a luxury. It is almost inevitable to interact with a group of individuals and at least one of them, not own an Apple product. Apple Inc. is an American-based multinational corporation that designs, manufactures, and markets consumer software and electronics, personal computers, as well as other communication-related services. Since launching the iPod mp3 player in 2001, the company has experienced tremendous growth. Presently, it is reputed as one of the most successful and biggest electronics manufacturer in the world. In addition, Apple Inc. is famous for its revolutionary marketing strategies, which have helped it to compete favorably against market rivals like South Korea’s Samsung Electronics, LG, IBM, and Microsoft. Despite the company’s financial success, however, it has faced criticism over its failure to enforce its ethical values and social responsibility policies, especially over its suppliers, who are accused of violating environmental regulations and workers’ rights. This paper critically examines Apple Inc.’s success and failures with regards to the enforcement its ethical code and social responsibility policies. In addition, it analyses the company’s marketing strategies, and possible ways of further enhancing its competitive edge over rivals.

Apple’s ethical and social responsibilities are grounded on the company’s code of conduct for suppliers. The principles of the code reflect the standards established by the United Nations, the International Labor Organization, and the Electronic Industry Citizenship Coalition (EICC). The code of conducts requires the company’s suppliers to create a safe working environment for their workers, avoid child labor, offer acceptable minimum wages, adopt fair hiring practices, respect workers dignity, as well as implement environmentally friendly practices (Apple Inc., 2012). To ensure the code is enforced, the company conducts regular assessment and auditing of its plants and those of its suppliers. The company states that any violation of the code’s regulations automatically leads to termination of contracts and legal action.

Fair Treatment The fair treatment code requires all of Apple’s suppliers to desist from workplace harassment of employees. The company is against sexual harassment, physical and mental coercion, corporal punishment, verbal abuse, among other practices that undermine a worker’s dignity and freedom.
Antidiscrimination
Apple condemns all forms of worker and hiring discrimination, including on gender, racial, sexual orientation, religious, political affiliation, or nationality basis. In addition, the company’s policy advocates for equal treatment of employees for job assignments, promotion, wages, rewards, and training. With regards to gender equality, suppliers are prohibited against conducting pregnancy tests as the basis for discrimination unless it is to do with worker safety and legal requirements. Similarly, suppliers are prohibited against medical tests that could be used to discriminate against workers, unless the information is used to enhance workplace safety and create worker friendly environments.
Prevention of Forced Labor, Underage Labor, and Human Trafficking All of Apple’s suppliers are prohibited from employing trafficked persons/illegal immigrants, bonded/enslaved persons, or prisoners. In addition, the company is against transporting, transferring, or accepting persons by means of coercion, blackmail, coercion, fraud, abduction, or payment of monies to persons who have control over others with the aim of exploiting them. Accordingly, all labor must be provided voluntary, and employees have the liberty to resign or terminate their employment contracts at will, provided reasonable notice is given. In addition, workers should not be forced to surrender their government-issued identification documents such as driving license, work permits, national passport, or identification cards as condition for hiring. On this note, third-party agencies that recruit employees on behalf of the suppliers should comply with the Code’s provisions and the regulations of the countries of origin of workers, as well as the host countries. With regards to underage labor, the company is strictly against child labor. It demands that the minimum age of workers be 15 years, the legal minimum legal age of the host country, or the age for successful completion of the host country’s compulsory education.
Health and Safety Apple advocates for a safe working environment for workers. Accordingly, it requires its suppliers to ensure workers’ safety by implementing sound health and safety measures in all aspects of their business operations. In addition, suppliers are required to take safeguards against occupational injury, exposure to harmful chemicals, as well as establishing an effective emergency response program.
Working Hours All workers employed by Apple’s suppliers should work a maximum of 60 hours a week, which includes overtime. Workers should be allowed at least one off day a week, and should work voluntarily for overtime. Under no circumstances should working hours exceed the maximum time permitted under the relevant laws of the host country and the International Labor Organization.
Integrity and Work Ethics Apple requires its suppliers and employees to observe the highest standards of ethical conduct. The company’s code of ethics promotes business integrity by prohibiting corruption, embezzlement, and extortion or giving of bribes. At the same time suppliers should observe the Foreign Corruption Practices Act (FCPA), all anti-corruption conventions, and all relevant anti-corruption laws of the host countries. Apple’s business integrity principles are summarized into honesty, respect, confidentiality, and compliance. Suppliers and workers are required to engage in honest practices, treat the company’s stakeholders with respect, including employees, suppliers, and customers. The company also advocates for the protection of confidential information belonging to its suppliers, workers, and customers.
Wages and Benefits All suppliers are required to offer the required minimum wages under the applicable regulations. Similarly, suppliers are required to pay legally justified benefits. As such, workers should be compensated for overtime hours worked at the applicable premium rates, in addition to the regular working hours. Workers salary should not be deducted as a punishment or disciplinary measure. Additionally, suppliers should provide leave periods, vacations, and holidays to their employees, in accordance with the relevant laws and regulations of the host country.

Social Responsibility Apple’s social responsibility is geared toward environmental safety and conservation and community development. Apple Inc. promotes environmental safety by requiring and encouraging its suppliers to reduce environmental impact of their operations by adopting environmental friendly designs, waste emission and manufacturing processes. For instance, the company requires its suppliers to comply with its most recent edition of its Regulated Substances Specification, 069-0135, which prohibit the use of specific substances considered to be harmful to the environment (Apple Inc., 2012). Apple also enforces the safe handling, storage, transfer, recycling, and disposal of substances that are pose a hazard to the environment if released. Similarly, suppliers are obliged to control, monitor, and treat air pollutants of organic chemicals, corrosives, ozone-depleting chemicals, and aerosols.
Criticism
Although Apple Inc. has developed a comprehensive and ambitious code for its ethical and social responsibilities, the company is criticized for having two faces with regards to how it deals with its customers and workers. Where its customers are involved, Apple is a leading innovator of high-quality products that offer the best services to consumers. Indeed, Apple’s success is founded on offering unmatched user experience with its smart phones, personal computers, and other service applications. However, the company shows little enthusiasm when dealing with the plight of workers in its foreign plants and those employed by its suppliers (Litzinger, 2013). The biggest challenge that the company has faced on this score is lack of a direct influence over the hiring and operations of its foreign suppliers. While the code of conduct provides recommendable guidelines, Apple seems to be satisfied by meeting its obligation of simply having a code of conduct in place, and passing the burden of enforcement to its suppliers. This is because despite conducting regular audits on its suppliers, there are still several cases of poor working conditions, low wages, and violation of environmental safety regulations. This is especially the case in the company’s Chinese plants and among its foreign suppliers. Some of these cases include accusations of using sweatshop labor, unethical business practices, and environmental destruction. In June 2006, The Mail reported that the company’s iPods manufacturing plant in China employs 200, 000 workers living in dormitories where visitors are not allowed. The workers were said to work 15-hour days for which they were compensated as little as $50 in monthly wages (Musgrove, 2006). These accusations, some of which Apple rationalized as a factor of prevailing economic/industry conditions in the countries in question, suggest that the company is either not committed to implementing its code of conduct of ethical and social responsibility, or it has failed to enforce it. One of Apple’s principles pertaining to business integrity is protecting the privacy of its customers. However, Apple was identified by the Washington Post in June 2013 as one of a number of American companies that were cooperating with NSA’s surveillance program PRISM. The collaboration allows NSA to secretly access personal information about non-US citizens without a warranty (Greenwald, 2013). This accusation, whose leaks government officials acknowledged, shows the hypocrisy of Apple with regards to its claim of integrity. Apple’s mission statement suggests that this might not be an accident after all. The company’s mission simply highlights the products it manufactures, and its position as a global leader. It does not elaborate how it values its workers, consumers, and other stakeholders, or concerns for the environment. The publication of ethics and social responsibility violations made by Apple’s suppliers has had some positive impacts with regards to treatment of workers. For instance, the company’s 2013 report shows that as a result of its auditing programs, industry-wide compliance with the 60-hour work week requirement has increased to 92 percent (Apple.com, 2014). This follows the 393 audits it conducted at all levels of its supply chain.

Two possible methods that Apple may utilize to ensure that its suppliers adhere to wage and benefits standards going forward include collaborating with the governments of the countries where their suppliers are located, and adopting a pricing scale for supplier products based on the level of compliance with the wage and benefit standards. The first method is necessary because the cost of living differs from country to country. As such, the governments of the host countries are in a better position to determine the acceptable minimum wages to reflect the cost of living. Secondly, the local governments are better placed to enforce the wage and benefit requirements. They can achieve this by making it a condition for obtaining and renewal of business permits and other documents that will allow the suppliers to do operate.
The adoption of a pricing scale based on levels of compliance is a powerful incentive for suppliers. In addition to quality, suppliers will be required to offer acceptable wages to attract good prices for their products. Since suppliers will compensate for the additional costs through better prices, they will be willing to meet the requirement. I believe that Apple’s customers will be willing to pay more for its products to enable the company’s suppliers pay higher wages to workers. This is because Apple’s success is not based on a pricing strategy, but on quality. Apple simply sells value to its customers, who are only happy to own a Mac, an iPhone or iPod. At the same time, Apple has already established a royal customer base whose commitment is cult-like. As a result, customers are less likely to be put off by an increase in prices. In any case, the kind of customers who choose an iPhone over a Blackberry are attracted by specific features that an iPhone offers, and therefore affordability is not an issue. Apple’s Marketing Strategy Apple Inc.’s overall marketing strategy is based on understanding user’s needs, and manufacturing products that offer a unique user experience (Moorman, 2012). In addition, Apple markets its products in a creative and professional manner that reflects the quality of the product. For instance, the iPhone is not presented as just a mere phone, but a personal hand gadget that does everything that a person needs for their daily work and entertainment. In its adverts, Apple seems to convey the idea that if it is a phone one wanted, the iPhone is that phone, and some more. It is not hard for an iPhone user to conclude that the creativity and imagination that is employed in making it is inspired by the fantasy….if a personal computer were to be held in one hand…..you’ll have an iPhone. In brief, therefore, Apple’s overall marketing strategy is focused on selling value to the customer by presenting its products as uniquely made to offer a kind of user satisfaction that rival products could not offer. In other words, there is no substitute for the iPhone in terms of experience. Two recommendations that Apple may apply to improve its competitive advantage globally is making its products and applications compatible with those of competitors. This move will allow users of other products such as the Blackberry to use Apple services, and effectively expand its market share. The success of Microsoft with its applications is a good example. For instance, the popularity of Windows Operating System is influenced by its compatibility with different computer hardware systems made by different manufactures. The second action is adopting market segmentation by making products for different classes of people. This will ensure that Apple’s products are affordable to many consumers without compromising the needs of its high-end consumers. For instance, Nokia and Samsung manufactures ordinary phones for low-income earners and smart phones for the high-end consumers. As a result, the companies’ brand visibility is high throughout the world. By making cheaper products, Apple will be apple to promote its brand name more aggressively, and in the process gain new markets for its iPhones and other high-end products.

References
Apple Inc. (2012). Apple Supplier Code of Conduct. Accessed October 23, 2014< http://www.apple.com/supplier-responsibility/ >
Musgrove, M. (June 16, 2006), "Sweatshop Conditions at IPod Factory Reported", The Washington Post. Accessed October 23, 2014 http://www.washingtonpost.com/wp-dyn/content/article/2006/06/15/AR2006061501898.html
Greenwald, G. (June 6, 2013). "NSA taps in to internet giants' systems to mine user data, secret files reveal". The Guardian. Accessed October 23, 2014
Moorman, C. (2012). Why Apple Is a Great Marketer. Forbes. Accessed October 23, 2014< http://www.forbes.com/sites/christinemoorman/2012/07/10/why-apple-is-a-great-marketer/ />
Litzinger, R. (2013). "Labor in China: A New Politics of Struggle". South Atlantic Quarterly 112: 172–178.