Corporate Responsibility and Marketing Strategies
Examine Apple’s current position on the company’s ethical and social responsibilities, and determine whether or not the company has met these responsibilities. Provide two (2) examples that support your position. In addition to maximizing profits, one of the main objectives to many corporations today is to be well known for their responsible management and ethical performance. Apple is one of the most important companies throughout the world because of its size and their innovative products and services (Sanchez-Barajas, 2012). Nevertheless, innovation is what drives the sector development and the basis for the economic development. Furthermore, Apple has created about 514,000 jobs in 2011, which is an astronomical commitment to the economy (Sanchez-Barajas, 2012). Additionally, because of their business model focusing on outsourcing and their product characteristics, Apple could summarize material issues in two categories: environmental impact and supply chain management (Sanchez-Barajas, 2012).
These issues seem to be the basis for understanding Apple’s corporate social responsibility. First, Apple products are designed to eliminate environmental impact, by using less energy consumption, small packages, and recycling methods (Sanchez-Barajas, 2012). However, there are criticisms with the danger of some materials used for IPads or IPhones, and the development of material for production. When it comes to supply chain, Apple’s ethical performance policy aligning with the entire supply chain is very well explained. This goes further than the Foxconn scandal. According to Tyson (2013), “Foxconn, which is a popular Apple contractor for Apple, had terrible working conditions, where employees would rather kill themselves than build an Apple product. The lack of effective corporate governance and forceful establishments in where they do business has added to the challenges of the control of several suppliers, and high risk for the company when it comes to abusive labor practices and not complying with the law (Sanchez-Barajas, 2012).
Apple has the frameworks, and the information and understanding about their influence on society (Sanchez-Barajas, 2012). The main challenge depends heavily on the control of that impact. Nevertheless, Apple seems to be acting as a rational corporate citizen (Sanchez-Barajas, 2012). Apple’s ambition concerning supply chain management is essential for a responsible business. Determine the impact that the publication of ethics and social responsibilities violations made by Apple’s suppliers has had on Apple’s reputation. Support your response with examples of the impact in question. Apple developed their code of conduct in 2005 (Kaiser, 2012). It states “that working conditions in Apple’s supply chain are safe, that workers are treated with respect and dignity, and that manufacturing processes are environmentally responsible” (para. 3).
Although their supplier code of conduct had great intentions, it was not being supported either by Apple or its major suppliers (Kaiser, 2012). For example, employees were complaining of working long hors in unsafe conditions with little pay (Kaiser, 2012). Foxconn, their supplier in Chengdu, China, was guilty in violating Apple’s supplier’s code of ethics. Many of the employees worked more than 60 hours per week. According to Kaiser (2012), sometimes there would be about 20 employees stuffed inside a three-bedroom apartment. Additionally, Foxconn were employing underage workers (Kaiser, 2012). Furthermore, the factories were poorly ventilated, and the factories were being flooded with aluminum dust from the machines that shines the casings for IPads Apple has been under fire since the Foxconn scandal. Neither the workers nor the factory leaders had much to say about the issue. Therefore, the problem lies with Apple.
According to Karimova (2012), after checking Apple’s CSR policy there is more focus concerning the quality of products rather than the concerns of suppliers. According to Karimova (2012), more than 50% of the contractors being inspected by the company have disregarded the code at least one time annually since 2007. The company has been accused of turning the blind eye as their suppliers pollute the country of China (Hay, 2013). Toxic discharges have been trespassing the communities. These large volumes of discharge within the supply chain have caused great danger to the health and safety of the public. This was not the first time where Apple was scrutinized for environmental infractions and their secretive supply chain management in Chines manufacturing factories, where there products are assembled (Gray, 2013). Suggest two (2) methods that Apple can utilize to ensure that its suppliers adhere to wage and benefits standards going forward. Justify your response One method I would suggest to Apple is to make sure that the suppliers are held accountable for any wrongdoings. My next suggestion would be for Apple to have surprise visits to their supplier’s manufacturing facilities.
Apple should start tracking the work hours of the suppliers themselves and not rely solely on what the supplier has to say. Furthermore the procurement team must interact with suppliers on a daily basis to make sure their labor demands are met. According to Supplier Responsibility (2014), Apple began tracking the weekly work hours for nearly 1 million workers; also they begin to publish their findings on a monthly basis. As a result, nearly 92% of contractors were in compliance with the company across all work weeks, and the average hour per week was under 50 hours (Supplier Responsibility, 2014). Next, Apple should not tolerate any form of underage labor. I would recommend no longer working with suppliers that have underage workers. This may mean moving their operations inside the United States. However, when Apple discovered that their suppliers had underage workers working for them, they demanded them to correct this problem immediately as part of [their] Underage Labor Remediation Program (Supplier Responsibility, 2014).
If it is discovered that a supplier has underage workers, the supplier must retort that worker to an educational institution and fund their education to whichever institution they family chose (Supplier Responsibility, 2014). Additionally, the child would continue receiving compensation of what they were receiving while working for the supplier (Supplier Responsibility, 2014). I would also suggest that Apple follow up with the family to make sure the suppliers are holding up their end of the bargain. Determine whether or not you believe that Apple’s customers would be willing to pay more for its products if Apple had to increase selling prices in order to provide better wages and benefits for suppliers’ workers. Provide a rationale for your position I believe Apple customers would be willing to pay more for Apple products. This is all due to a simple concept called brand loyalty.
Business dictionary (2014) defines brand loyalty as: “the extent of faithfulness of consumers to a particular brand, expressed through their repeat purchases, irrespective of the marketing pressure generated by the competing brand” (para. 1). I am a loyal customer of Apple. I own several Apple products, and I would be willing to pay increased prices for their products. Apple’s customers are so loyal that they will camp outside the Apple store waiting on the new release of the latest Apple product. Additionally, when there are problems with Apple products, consumers are very patient with Apple as they resolve these issues (Goodson, 2011). They understand to the fact that technical issues will arise, and they will continue to buy the products regardless to any mistakes the company may make (Goodson, 2011). The late Steve Jobs was very passionate about Apple products, he always ensured that they were of the best quality and had an innovative design (Goodson, 2011).
According to Goodson (2011), Brand loyalty is one of the main reasons Apple is so successful today. First, Apple has built relationships with their customers by being trustworthy and transparent (Goodson, 2011). Secondly, Apple has carried out some very innovative marketing strategies (Goodson, 2011). Furthermore, they do not focus on the actual product itself, however; they focus on what the product can do for the consumer. Apple’s mission statement is unique. It does not talk about their products, but what they actually believe in. It states: “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative, software and Internet offerings” (Goodson, 2011, para. 11). The success of Apple is because their mission statement reverberates throughout every part of Apple’s operations (Goodson, 2011). Finally, passion and dedication goes into making Apple products, and people who buy those products understand.
Analyze Apple’s current overall marketing strategy. Recommend two (2) actions that Apple can take in order to improve its competitive advantage in the global marketplace. Support your response with examples of instances where your recommendations yielded the desired results. Since the incorporation of Apple in 1977, investor/advisor, Mike Markkula created a 3-point marketing philosophy that has remained the core of the effectiveness of Apple today (Moorman, 2012). Here is Apple’s original 3 point according to Moorman (2012):
These principles made the company one of the worlds’ most valuable companies. (Moorman, 2012). Part of their marketing strategy is that they hire customer obsessed, empathetic employees. A major key to Apple’s success is that they create products that the customers are turned on to (Moorman, 2012). This will usually mean that customers will get what they want because the employees are so enrooted in and committed to the experiences of the consumer. Next, Apple has enabled customer discovery and differentiation through retail stores (Moorman, 2012). Having retail store gives the company an opportunity to show off their design courageousness (Moorman, 2012). Lastly, Apple has conceived their business model that creates everlasting value for their customers (Moorman, 2012).
One action to plan to ensure Apple maintains their competitive advantage in the industry is to lower the prices so people in various urban demographics can have the Apple experience. This strategy will allow Apple to capture high margins with early adopters and drive penetration among a broader, more price conscious audience at a later date (Stark & Stewart, 2012). Not every company has product launches that allow it to adopt this strategy, but there are always opportunities to evolve and re-price a successful product to address the needs of a new and different customer segment. Apple launched its most recent iPhone a year ago; it reduced the price of its 3G version to $99. Simultaneously, when it’s most recent launch of the new iPad, it reduced the price of the iPad 2 by $100. In both cases, Apple established a market for additional customer segments (Stark & Stewart, 2012).
The second action plan I would suggest is to always focus on the future, and continue to focus on being the dominant player in the industry. As the company continues to create an innovative product, the expectations of consumers begin to rise. IPad sales for Apple’s fiscal first quarter increased 11% over the year-ago quarter, and the company still maintains 74% market share in tablets (Stark & Stewart, 2012). Apple competitors have created products similar to the IPad thinking they would gain an advantage over Apple. However, If Apple continues to create innovative products they will remain ahead of their competitors (Stark & Stewart, 2012).
Business Dictionary. (2014). Brand loyalty. Retrieved January 22, 2014. From http://www.businessdictionary.com./definition/brand-loyalty.html. Goodson, S. (2011). Is brand loyalty the core to Apple’s success? Retrieved January
22, 2014. From http://www.forbes.com/sites/marketshare//2011/11/27/is-brand-loyalty-the-core0to-apples-success-2/ Hays, J. (2013). Apple and Foxconn: Work conditions, problems and changes. Retrieved January 22, 2014. From http://factsanddetails.com/china/cat9/sub61/item2282.html. Kaiser, T. (2012). Report: Apple’s suppliers continuously violate code of conduct, Apple does nothing to change it. Retrieved Januray 22, 2014. From http://dailytech.com/report+Apples+suppliers+continously+violate+code+of+conduct+Apple+does+nothing+to+change+it/article23867.htm. Karimova, H. (2012). Apple’s road to innovation requires some sacrifice. Retrieved January 22, 2014. From http://eoi.es/blogs/hokumakarimova/2012/05/13/apple%/E2%80%99s-road-to-innovation-requires-some-sacrifice/ Moorman, C. (2012). Why Apple is a great marketer. Retrieved January 22, 2014. From http://www.forbes.com/sites/christinemoorman/2012/07/20/why-apple-is-a-great-marketer/2/ Sanchez-Barajas, D.P. (2012). Case study: Apple Inc. and the challenge of a social responsible management. Retrieved January 22, 2014. From http://eois.es/blogs/dianapatriciasanchez/2012/05/28/case-study-apple-inc-and-the-challenge-of-a-social-responsible-management/ Stark, K. & Stewart, B. (2012). 3 strategies to adopt from Apple. Retrieved January 22, 2014. From http://www.inc.com/karl-and-bill/3-strategies-to-adopt-from-apple.html Supplier Responsibility. (2014). If companies want to do business with us, they must act fairly and ethically at all times. Retrieved January 22, 2014. From http://apple.com/supplierresponsibility/labor-and-human-rights.html. Tyson, B. (2013). A look at Apple’s record of corporate social responsibility. Retrieved January 22, 2014. From http://www.insidebusiness360.com/index.php/a-look-at-apples-records-of-corporate-social-responsibility-2611/