Ethical Practices in Apple Inc

 Ethical Practices in Apple Inc
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Ethical Practices in Apple Inc
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Ethical Practices in Apple Inc
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Introduction
Companies should not sacrifice ethics for the sake of profits, instead; ethics should drive
business towards profitability. However, due to the competitive business environment, some
manager may be tempted to engage in unethical business activities in order to reduce operational
expenses and increase revenues resulting in higher margins, hence out pacing their peers in the
industry.
Ethical behavior of firms has received overwhelming interests among researchers due to recents
cases of corporate scandals, which has led to increased government regulations, pressure from
the media and stakeholders underpinning the importance of ethical behavior on business
performance. However, Berrone, Surroca and Tribo (2007) observe that the link between ethical
behaviours of firm and business performance is yet to be fully established. On the other hand,
Bamford and West (2010, p.25) and Jensen (2001) assert that ethical business practices aid
business firms to gain competitive advantage because ethical behavior of firms generate positive
externalities, necessary for long term performance of the firm. Jensen (2001) disputes the notion
that ethical behavior of firm foster business performance, terming ethical initiatives “investments
without payoff”
Recent media reports indicate that Apple, one of the world’s largest and most economically
successful organizations in the world, undermines ethical principles in pursue of profits, though,
Apple explicitly state that its business practice are underpinned by ethical principles and norms.
Among the allegations levelled against the technology giant include: deceptive marketing
practices, tax avoidance, child labour and, recent cases of compromised products. Therefore, 
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there is a need to discuss and evaluate ethical behaviours of Apple in the light of these
allegations.
Overview of Apple Inc and its Activities
According to Apple (2012) and Morrissey (2010) Apple Inc was founded by founded by Steve
Job and Steve Wozniak in 1976 and has over the years grown to become a leader in the computer
industry. The management and visionary leadership of this technology company is credited for
revolutionizing technology through innovation of major products such as the iPad, iPhone, iPod,
iMac and Apple TV. Additionally, Apple sells digital content through the iTunes Store,
iBookstoresSM, Mac App Store and App StoreSM together with application and operating
software applications iCloud, iTunes and iOS.
Apple’s flagship of strong brands in the computing and phone segment has made the company to
be highly respected internationally and contributed immensely to the success of the company.
The success and recognition of Apple, both in the domestic and international markets,
necessitates that the giant computer and phone maker puts in place ethical policies to aid
maintain the positive image the company enjoys in the domestic and international markets,
therefore continue to gain competitive advantage over industry competitors. Though, Apple Inc
does not produce its products directly but outsources production to Chinese firms, it ensure that
the suppliers engage in ethical business activities. Apple (2012) reports that Apple Inc requires
suppliers to abide with Suppliers Code of Conduct that seeks to entrench ethical behaviour in
suppliers business activities.
Ethical Policies in Apple Inc
In the contemporary business environment, multinational companies are either outsourcing 
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business activities to cheaper destinations in Asian countries such as China and India, or
sourcing production services from the Asian countries. Yip (2007) explains that multinational
business enterprises prefer to outsource the production of their products, or source products from
Asian countries because of low cost, high skilled labour in the Asian countries, especially India
and China. Additionally, Karlgaard (2012) continues to explain that manufacturing plants in
Asian countries produce high quality products at low production costs making them attractive to
multinational business enterprises keen to enhance their competitiveness in a competitive
business environment. Apple, just like other multinational companies, seeking to cut on their
labour and operational costs has outsourced its production of computer and phone products to
China in order to produce high quality products at low production costs and enhance
competitiveness over competitors in the computer and phone industry. Hitt et al., (2012, p.168)
also note that Apple Inc sources products from Asian countries, particularly from China, where
Chinese manufacturing companies produce a variety of electronic products such as microchips,
screens, b