Posted: May 24th, 2022

Apple Case Study on Code of Ethics

Apple Case Study

Apple (NASDAQ:AAPL) is a global leader in the development, design, manufacturing and marketing of smartphones, tablets, media devices, personal computers, operating systems, services, peripherals and network solutions. As of December 2014 the company is operating in 16 nations, with 444 open Apple retail outlets (Apple Investor Relations, 2014). The company has 92,600 employees and generated $182B in revenue during their latest financial or fiscal year that ended September 31, 2014 (Apple Investor Relations, 2014). This was a 7% increase over the previous year. The company is very profitable, generating $52.5B in profits in their latest financial reporting year, also increasing 7.2% over 2013. Countries the company operates include Australia, Brazil, Canada, China, France, Germany, Hong Kong, Italy, Japan, Netherlands, Spain, Sweden, Switzerland, Turkey, and the United Kingdom with the majority of stores in the United States (Apple Investor Relations, 2014).

Analysis of Market Systems

The nations that Apple operates in a varied in their market and legal systems, with the greatest difference being in France, Hong Kong and Turkey. The French market and legal systems seek to protect the French consumers first and foremost, which makes it very expensive for Apple to have stores and offices there. This can be seen from their latest annual report and the many costs associated with operating in France (Apple Investor Relations, 2014). Based on an analysis of the company’s financial reports and reading over their filings with the Securities and Exchange Commission, it’s clear that the more complex a market or legal system, the more expensive it is to operate in. Apple also has a very extensive supply network that operates in more countries than its retail stores (Brustein, 2014). The supply chain network is mentioned often in company annual reports as it is considered a core competency and an area that company prides itself on for ethics best practices (Apple Investor Relations, 2014). The Supplier Responsibility Program is designed to promote and bringing greater levels of ethics to each member of their supplier network. This is in response to the criticisms the company has received in the past for unethical working conditions in their iPhone and iPad supplier and manufacturing partners’ locations. The Supplier Responsibility Program is required for suppliers if they want to do business with Apple, as it provides greater analytics and oversight of their ethics in managing manufacturing and supplier activity (Apple Investor Relations, 2014).

The greatest political risks that Apple is facing today include tariffs in France on their phones, the potential for unrest in Turkey and continued counterfeiting challenges in China of their core products (Apple Investor Relations, 2014). Political unrest in China regarding working conditions and the recent protests about pensions will continue to be an issue for Apple in 2015. As a political consultant for the company, my recommendation is to partner as closely as possible with the Chinese government and be a leader in paying pensions for Apple employees immediately. This will put Apple ahead of Chinese companies, many of which are dragging their feet to pay pensions for their factory employees right now. I’d also tell Apple to make sure the operations in Turkey are staffed by nationals and start thinking of how to create a completely separate, stand-alone Turkish operation in the event more conflict emerges in that region.

The key stakeholders for Apple include the customers, employees, government agencies that want Apple to stay in compliance with supply chain ethics standards, foreign national governments concerned over Apple’s pricing and distribution practices that they consider a threat to their own industries (Apple Investor Relations, 2014). Apple also must keep all of its suppliers, manufacturing, and distribution centers orchestrated and in tough with each other during product introductions. Apple excels at new product introductions across the countries it operates in today (Domanico, 2014). With such a strong focus on making new products successful, the pressure to keep each stakeholder informed is very intense in the company. Apple’s approach to managing each stakeholder group is to provide frequent information updates and also define how and where new product introductions pay off the fastest in terms of new revenue and global growth (Apple Investor Relations, 2014). Apple also has a very extensive base of investors given the strong performance of its stock price, and has a very efficient system for communicating with its financial stakeholder as well (Coy, 2014).

Finally and most significant is the company’s Code of Conduct. Apple has frequently been criticized for its lack of supplier ethics (Apple Investor Relations, 2014). In response to these criticisms, Apple has created the Supplier Code of Contact that defines Apple’s expectations for how suppliers manage and excel at human and labor rights, delivering greater health and safety for any worker associated with Apple products. The Code of Contact also defines environmental protection, ethics and management practice. It is the most important for Apple to stay consistent with, because they are so dependent on international suppliers. The Code of Contact ensures the company will have a stable supply chain to operate with in the future, which is essential given the very rapid new product development and introduction approach of the company.

The best indicators the company can use to guide its investment and actions in the future include market share in each of the nations it competes in, the costs and revenue associated with their stores in each country, and how effective their product strategies are in each region and nation. Apple tracks all of these indicators today as can be seen in their annual report (Apple Investor Relations, 2014). Apple needs to also measure customer satisfaction as they have many loyal fans, which nearly guarantee each new product will be successful based on demand for the existing customer base alone. Apple needs to manage this customer base well, it is the lifeblood of their future business.

Bibliography:

Apple – Investor Relations (2014). Retrieved December 27, 2014, from http://investor.apple.com/

Brustein, J. (2014, Oct). New iPads, iMacs, and apple pay: Nine things we learned from Apple. Business Week, 1.

Coy, P. (2014, Nov). Inside Apple’s gigantic rewards program for shareholders. Business Week, 1.

Domanico, A. (2014, 11). New iPhones: Roomier, thinner, and speedier. Macworld, 31, 28.

Mitchell, W. (2014). Why Apple’s product magic continues to amaze – skills of the world’s #1 value chain integrator. Strategy & Leadership, 42(6), 17.

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