Apple Inc.

s Ethical issues, Success and Challenges

Executive summary:
Apple Inc. is a corporation that designs and manufactures computer hardware, software And other consumer electronic products. The company is known for the Macintosh Personal computers, iTunes media applications and the iPod personal music players. Apple was founded in April 1976 by Steven Wozniak and Steve Jobs, both college Dropouts. In 1976, Wozniak and Jobs created the Apple I computer which did not have a keyboard or power supply for a computer hobbyist club. Later that summer Wozniak started his development of the Apple II, which was designed to attract a broader market Than the hobbyist clubs. The earliest Apple II used cassette tapes to read and store

Information, which were unreliable and slow. By 1978, Wozniak had introduced the Apple Disk II at the time was the only fastest and cheapest disk drive available for Computers. The Disk II led to the development of software for the Apple II (Funding Universe, 2011). According to Funding Universe (2011), The introduction of Apple II, With a user manual, at a consumer electronics show signaled that Apple was expanding Beyond the hobbyist market to make its computers consumer items. By the end of 1978, Apple was one of the fastest growing companies in the United States, with its products Carried by over 100 dealers (Company Histories, Para. 1-8). In December 1980, Apple Went public, the company is traded on the NASDAQ exchange and the ticker symbol is AAPL (Common Stock). According to Funding Universe (2011), The offering of 4.6 Million shares at twenty-two dollars each sold out within minutes. A second offering of

2.6 million Shares quickly sold out in May 1981 (Company Histories, Para. 1-8). In 1998, Apple released the iMac and in 2001, they released Mac OS X, an operating System that attracted.

INTRODUCTION
Headquartered in Cupertino, California, Apple Inc. has experienced many challenges throughout its Business history. In 1997 Apples share price was $3.30. In 2011 its share price had risen to $339.87. For the past four years, Apple has earned first place among Fortune magazines Worlds Most Admired Companies. To millions of consumers, the Apple brand embodies quality, prestige, And innovation. The brand is valued at more than $153 billion, making it the most valuable brand Worldwide. Although companies have tried to copy the Apple business model, none has been able to discover What it is that makes Apple so unique? Many believe that Apples success stems from a combination Of several factors, including the remarkable leadership skills of CEO Steve Jobs, a corporate culture Of enthusiasm and innovation, and the high-tech products for which Apple is known. These Combining qualities have allowed Apple to revolutionize the technology and retail industries.

APPLES HISTORY
Apples first product, the Apple I, was vastly different from the Apple products of today. This first Handmade computer kit was constructed by Apple co-founder Steve Wozniak. It lacked a graphic User interface (GUI), and buyers had to add their own keyboard and display. Co-founder Steve Jobs Convinced Wozniak that it could be sold as a commercial product. In 1976 the Apple I was unveiled At the Home Brew Computer Club and put on sale for $666.66. Jobs and Wozniak continued to create innovative products. Soon their new company, Apple Computer Inc., had surpassed $1 million in sales. However, the mid-1980s saw some difficult times For Apple. In 1983 the company introduced the Apple Lisa for $10,000. The product flopped. In 1985 Steve Jobs was ousted after internal conflicts with the Apple CEO. Its computer products the

Mac I and the Newton were not successful, and the company underwent several CEO changes. With Declining stock prices, the future of Apple was in jeopardy. Steve Jobs returned to Apple in 1997 to try and save the struggling company. The return of Jobs Introduced a new era for Apple. Jobs immediately began to change the companys corporate culture. Before Jobs return, employees were more open about Apple projects. After he returned, Jobs Instituted a closed door policy. Today Apple continues to remain vigilant in protecting its Technology and ensuring that information remains proprietary. Jobs also created a more flattened Organizational structure; rather than go through layers of management to address employees, he Addressed them directly. Perhaps one of the most noticeable changes, however, was Apples Expansion into new product lines within the electronics industry. In 2001 Apple launched the 2 IPoda portable music player that forever changed the music industry. The company also Introduced iTunes, a type of jukebox software that allowed users to upload songs from CDs onto Their Macs and then organize and manage their personalized song libraries. Two years later Apple Introduced the iTunes Store, in which users could download millions of their favorite songs for $0.99 each online. In 2007 Jobs announced that Apple Computer, Inc. would be re-named Apple Inc. This signified that Apple was no longer just a computer manufacturer but also a driver in consumer electronics. Some Saw this as a shift away from computers toward consumer electronics such as Apple TV, iPods, ITunes, iPhones, and iPads. However, it may be more accurate to say that Apple is reinventing Computers. With the introduction of tablet computers such as the iPad, Apple has begun to take Market share away from its top competitors in the computer industry. Sales of desktops, laptops, And notebooks began to decline after tablet computers were introduced. Analysts believe that tablet Computers will continue to grow at a rapid rate.

APPLES ETHICS
Apple has tried to ensure that its employees and those with which they work display appropriate

Conduct in all situations. It bases its success on creating innovative, high-quality products and Services and on demonstrating integrity in every business interaction. According to Apple, four Main principles contribute to integrity: honesty, respect, confidentiality, and compliance. To more Thoroughly detail these principles; Apple has drafted a code of business conduct that applies to all Its operations, including those overseas. It has also made available on its website more specific Policies regarding corporate governance, director conflict of interest, and guidelines on reporting Questionable conduct. Additionally, Apple provides employees with a Business Conduct Helpline That they can use to report misconduct to Apples Audit and Finance Committee. Many of Apples product components are manufactured in countries with low labor costs. The Potential for misconduct is high due to differing labor standards and less direct oversight. As a Result, Apple makes each of its suppliers sign its Supplier Code of Conduct and performs factory Audits to ensure compliance. Apple may refuse to do additional business with suppliers who refuse To comply with Apples standards. To emphasize its commitment toward responsible supplier Conduct, Apple releases an annual Apple Supplier Responsibility Report that explains its supplier Expectations as well as its audit conclusions and corrective actions the company will take against Factories where violations have occurred.

ETHICAL ISSUES AT APPLE INC.

Although Apple has consistently won first place as the Worlds Most Admired Company, it has Experienced several ethical issues within recent years. These issues could have a profound effect on 4 The companys future success. Apples sterling reputation could easily be damaged by serious

Misconduct or a failure to address risks appropriately:

Apple is committed to ensuring that working conditions in Apples supply chain Are safe, that workers are treated with respect and dignity, and that manufacturing Processes are environmentally responsible. Apples suppliers (Suppliers) commit, In all of their activities, to operate in full compliance with the laws, rules, and

Regulations of the countries in which they operate. This Supplier Code of Conduct Goes further, drawing upon internationally recognized standards, in order To advance social and environmental responsibility. Apple requires that Suppliers implement this Code using the management Systems described below. Apple may visit (and/or have external monitors visit) Supplier facilities, with or without notice, to assess compliance with this Code and To audit Suppliers wage, hour, payroll, and other worker records and practices. Violations of this Code may result in immediate termination as an Apple Supplier And in legal action. The Apple Supplier Code of Conduct is modeled on and contains language From the Electronic Industry Code of Conduct. Recognized standards such as the Universal Declaration of Human Rights (UDHR), and standards issued by organizations such as the International Labor Organization (ILO), Social Accountability International (SAI) and the Ethical Trading Initiative (ETI) were used as references In preparing this Code and may be useful sources of additional information. A Complete list of references is provided at the end of this Code. As an extension Of the Code, Apple maintains a series of detailed Standards that clarify our Expectations for compliance.

Labor and Human Rights

Suppliers must uphold the human rights of workers, and treat them with dignity And respect as understood by the international community.

Antidiscrimination:
Suppliers shall not discriminate against any worker based on race, color, age, Gender, sexual orientation, ethnicity, disability, religion, political affiliation, union Membership, national origin, or marital status in hiring and employment practices

Such as applications for employment, promotions, rewards, access to training, Job assignments, wages, benefits, discipline, and termination. Suppliers shall not Require a pregnancy test or discriminate against pregnant workers except where Required by applicable laws or regulations or prudent for workplace safety. In Addition, Suppliers shall not require workers or potential workers to undergo Medical tests that could be used in a discriminatory way except where required By applicable laws or regulations or prudent for workplace safety. Apple Supplier Code of Conduct 2

Fair Treatment:
Suppliers shall commit to a workplace free of harassment. Suppliers shall not Threaten workers with or subject them to harsh or inhumane treatment, including Sexual harassment, sexual abuse, corporal punishment, mental coercion, physical Coercion, verbal abuse, or unreasonable restrictions on entering or exiting company provided facilities. Suppliers shall prohibit harassment and unlawful discrimination in the workplace.

Prevention of Involuntary Labor and Human Trafficking:

Suppliers shall not traffic in persons or use any form of slave, forced, and bonded, Indentured, or prison labor. This includes the transportation, harboring, recruitment, Transfer, or receipt of persons by means of threat, force, coercion, abduction, fraud, Or payments to any person having control over another person for the purpose of Exploitation. All work must be voluntary and workers shall be free to leave work or Terminate their employment with reasonable notice. Workers must not be required To surrender any government-issued identification, passports, or work permits as a Condition of employment. Suppliers shall ensure that third-party agencies providing Workers are compliant with the provisions of the Code and the laws of the sending And receiving countries, whichever is more stringent in its protection of workers.

Suppliers shall ensure that contracts for both direct and contract workers clearly Convey the conditions of employment in a language understood by the worker. Where workers are required to pay a fee in connection with obtaining employment, Suppliers shall be responsible for payment of all fees and expenses in excess of The amount of one month of the workers anticipated net wages. Such fees and Expenses include, but are not limited to, expenses associated with recruitment, Processing or placement of both direct and contract workers.

Prevention of Underage Labor:

Child labor is strictly prohibited. Suppliers shall not employ children. The minimum Age for employment or work shall be 15 years of age, the minimum age for employment in that country, Or the age for completing compulsory education in that Country, whichever is higher. This Code does not prohibit participation in legitimate Workplace apprenticeship programs that are consistent with Article 6 of ILO Minimum Age Convention No. 138 or light work consistent with Article 7 of ILO Minimum Age Convention No. 138.

Juvenile Worker Protections:

Suppliers may employ juveniles who are older than the applicable legal minimum Age for employment but are younger than 18 years of age, provided they do not Perform work likely to jeopardize their health, safety, or morals, consistent with ILO Minimum Age Convention No. 138.

Working Hours:
Except in emergency or unusual situations, a work week shall be restricted to 60 Hours, including overtime, and workers shall take at least one day off every seven Days. All overtime shall be voluntary. Under no circumstances shall work weeks Exceed the maximum permitted under applicable laws and regulations.

Wages and Benefits

Suppliers shall pay all workers at least the minimum wage required by applicable Laws and regulations and provide all legally mandated benefits. In addition to Their compensation for regular hours of work, workers shall be compensated for Overtime hours at the premium rate required by applicable laws and regulations. Suppliers shall not use deductions from wages as a disciplinary measure. Laws and regulations. Suppliers shall pay workers in a timely manner and clearly Convey the basis on which workers are being paid.

Freedom of Association:
Suppliers must respect the right of workers to associate freely with, form, and Join workers organizations of their own choosing, seek representation, and Bargain collectively, as permitted by and in accordance with applicable laws and Regulations. Suppliers shall not discriminate with respect to employment based On union membership and, in particular, shall not make employment subject to The condition that the worker relinquishes union membership or agrees not to join A union; or cause the dismissal of or otherwise prejudice a worker by reason of Union membership or participation in union activities outside working hours (Or within working hours if the Supplier has consented to such activities or if Required by applicable laws or regulations). Suppliers shall protect against acts of interference with the establishment, functioning, or administration of workers Organizations in accordance with applicable laws and regulations.

Health and Safety:

Apple recognizes that integrating sound health and safety management practices Into all aspects of business is essential to maintain high morale and produce

Innovative products. Suppliers shall commit to creating safe working conditions And a healthy work environment for all of their workers.

Occupational Injury Prevention:

Suppliers shall eliminate physical hazards where possible. Where physical hazards Cannot be eliminated, Suppliers shall provide appropriate engineering controls Such as physical guards, interlocks, and barriers. Where appropriate engineering Controls are not possible, Suppliers shall establish appropriate administrative Controls such as safe work procedures. In all cases, Suppliers shall provide workers With appropriate personal protective equipment. Workers shall not be disciplined for raising safety concerns and shall have the right to refuse unsafe working Conditions without fear of reprisal until management adequately addresses Their concerns.

Prevention of Chemical Exposure:

Suppliers shall identify, evaluate, and control worker exposure to hazardous Chemical, biological, and physical agents. Suppliers must eliminate chemical Hazards where possible. Where chemical hazards cannot be eliminated, Suppliers Shall provide appropriate engineering controls such as closed systems and Ventilation. Where appropriate engineering controls are not possible, Suppliers Shall establish appropriate administrative controls such as safe work procedures. In all cases, Suppliers shall provide workers with appropriate personal protective Equipment.

Emergency Prevention, Preparedness, and Response:

Suppliers shall anticipate, identify, and assess emergency situations and events And minimize their impact by implementing emergency plans and response Procedures, including emergency reporting, worker notification and evacuation

Procedures, worker training and drills, appropriate first-aid supplies, appropriate Fire detection and suppression equipment, adequate exit facilities, and recovery Plans. Suppliers shall incorporate C-TPAT security criteria into their business Processes as described in the U.S. Customs website, www.cbp.gov.Apple Supplier Code of Conduct 4 Occupational Safety Procedures and Systems Suppliers shall establish procedures and systems to manage, track, and report Occupational injury and illness. Such procedures and systems shall encourage Worker reporting, classify and record injury and illness cases, investigate cases and Implement corrective actions to eliminate their causes, provide necessary medical Treatment, and facilitate the workers return to work.

Ergonomics:
Suppliers shall identify, evaluate, and control worker exposure to physically Demanding tasks, including manual material handling, heavy lifting, prolonged Standing, and highly repetitive or forceful assembly tasks.

Dormitory and Dining:

Suppliers shall provide workers with clean toilet facilities, access to potable water, And sanitary food preparation and storage facilities. Worker dormitories provided by the Supplier or a third-party agency shall be clean and safe and provide Adequate emergency egress, adequate heat and ventilation, reasonable personal Space and reasonable entry and exit privileges.

Health and Safety Communication:

In order to foster a safe work environment, Suppliers shall provide workers with Appropriate workplace health and safety information and training, including Written health and safety information and warnings, in the primary language of The workers. Suppliers shall post, in the primary language of its workers, Material

Safety Data Sheets for any hazardous or toxic substances used in the workplace, And properly train workers who will come into contact with such substances in The workplace.

Worker Health and Safety Committees:

Suppliers are encouraged to initiate and support worker health and safety Committees to enhance ongoing health and safety education and to encourage Worker input regarding health and safety issues in the workplace.

Environmental Impact:

At Apple, environmental considerations are an integral part of our business Practices. Suppliers shall commit to reducing the environmental impact of their Designs their facilities.

Ethics:
Suppliers must be committed to the highest standards of ethical conduct when Dealing with workers, suppliers, and customers.

Business Integrity:
Corruption, extortion, and embezzlement, in any form, are strictly prohibited. Suppliers shall not violate the Foreign Corrupt Practices Act (FCPA), any international antiCorruption conventions, and applicable anti-corruption laws and Regulations of the countries in which they operate, and shall not engage in Corruption, extortion, or embezzlement in any form. Suppliers shall not offer or accept bribes or other means to obtain an undue or improper advantage. Suppliers must uphold fair business standards in advertising, sales, and competition.

Disclosure of Information:
Suppliers must accurately record and disclose information regarding their Business activities, structure, financial situation, and performance in accordance With applicable laws and regulations and prevailing industry practices.

Whistleblower Protection and Anonymous Complaints:

Suppliers shall create programs to ensure the protection of Supplier and worker Whistleblower confidentiality and prohibit retaliation against workers who participate in such Programs in good faith or refuse an order that is in violation of the Apple Supplier Code of Conduct. Suppliers shall provide an anonymous complaint Mechanism for workers to report workplace grievances in accordance with local Laws and regulations. Recently, Apple has been hit with harsh criticism about the working conditions in their Foxconn Factories. There are many ethical boundaries that Apple has crossed in the factories such as Child labor, low pay, and damaging the environment. A news report claimed that the workers In China Threatened mass suicides if the issues were not taken care of. Tim Cook, the CEO of Apple has released records of the companys ethical issues and he hopes to correct them. A news article in the Financial Post (has highlighted similar issues that Apple is facing. In an Effort to save its reputation, the company has allowed the Fair Labor Association to Independently investigate the Foxconn factories. In the short term, these problems have not Harmed Apples sales since it is the most valuable company in the world. Since Tim Cook has Allowed investigations into the ethical issues it is likely that measures have been taken to Correct their ethical issues and therefore may not affect long term sales.

FAQs concerning apple inc. ethical issues: What we do to empower workers?

Because education is a great equalizer, were working with suppliers to provide Training and free onsite classes in a wide range of areas, including: Labor laws and our Supplier Code of Conduct Technical and language skills Worker-management communication

What we do to protect workers rights?

We constantly look for problems, and when we find them, we investigate the Causes and work to fix them. Here are just some of the topics were focused on: Ending excessive work hours Stopping underage and bonded labor Sourcing conflict-free minerals

What we do to safeguard workers health and well-being?

Ensuring safe work environments is only the beginning. Here is some other Ways were helping prevent problems and improve worker satisfaction: Establishing new safety standards Training workers on health and safety Improving ergonomics and worker well-being

What we do to reduce our environmental impact?

To make sure suppliers are acting in environmentally responsible ways, were Working with industry experts in these areas: Managing our carbon footprint

 Identifying high-risk facilities Conducting focused audits

How we hold ourselves and our suppliers accountable?

Apple is the first technology company to open its supply chain to the Fair Labor Association (FLA). We ensure compliance with our Supplier Code of Conduct by Conducting hundreds of audits per year worldwide. And we work with suppliers To make sure any problems we find are corrected.

Conclusion:
Theres an interesting piece here trying to detail the way in which Apple has Changed under Tim cook, the way that it is different since the death of Steve Jobs a year ago. They actually headline it by saying that the company has Become more ethical. Something which I seriously doubt for three reasons. But heres what they actually mean by that ethical The first is simply that Apple is a company. A company is a legal fiction, it isnt a person, it doesnt have a soul and it is entirely incapable of any action at all, Ethical or unethical. The second is that yes, Tim Cook has taken over from Steve Jobs as the CEO. But when we discuss the treatment of the workers in the supply chain weve Got to remember that its actually Tim Cook who has built that supply chain. But the third reason I dont agree with this more ethical suggestion is that I Dont believe the changes, such as they are, have been driven by anything so Refined as ethics.

Findings:
Now, you could, if you wished to, say that rising wages, better working

Conditions and greater workplace safety are all evidence of an increase in the Ethics, or the ethical behavior, of the employers. But I think youd be wrong: I Dont regard reacting to the blind laws of economics as being something that Can be described in ethical terms at all. For theres no choice here: thus there Cannot be ethical influence. Given the increasing shortage of labor youve got To increase the price you pay for labor. If you dont you dont have any labor With which to manufacture. Under such circumstances, what exactly is Ethical, about raising wages?
Apple has become a very much more valuable company this past year, has Launched a new iPhone, is making ever more money, instituted a dividend and Has arguably changed at least somewhat. But become more ethical, no, not Really.

References:
Apple consulted the following references in preparing this Code: Eco-Management and Audit Scheme www.quality.co.uk/emas.htm Electronic Industry Code of Conduct www.eicc.info/eicc_code.shtml Ethical Trading Initiative www.ethicaltrade.org/ ILO Code of Practice in Safety and Health www.ilo.org/public/english/protection/safework/cops/english/ ILO International Labor Standards www.ilo.org/public/english/standards/norm/whatare/fundam/index.htm

 ISO 14001 www.iso.org National Fire Protection Association www.nfpa.org/categoryList.asp?categoryID=143&URL=About%20NFPA OECD Guidelines for Multinational Enterprises www.oecd.org OHSAS 18001 www.bsi-global.com/index.xalter SA 8000 www.cepaa.org/ SAI www.sa-intl.org United Nations Convention Against Corruption www.unodc.org/unodc/en/corruption/index.html?ref=menusideApple Supplier Code of Conduct 8 United Nations Global Compact www.unglobalcompact.org Universal Declaration of Human Rights www.un.org/Overview/rights.html UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights www.ohchr.org