Contemporary supply systems are also susceptible to risks that generate short-term expenses and difficulties. Modern production lines are characterized by continuous and inescapable transformation. As Apple’s presence grows and develops every day, so is the issue of its accountability to diverse ecosystem players. The connection between Apple and its overseas vendors has been a significant concern for the corporation, as extensive media exposure has gained the attention of the circumstances throughout its supply chain. Expected to continue to be hotly discussed is whether Apple should hold itself accountable for a corporate social obligation as it does for its business performance. Therefore, this case study examines, through the perspective of Apple, distribution network administration risk concerns at Foxconn and Pegatron and how they might be addressed through a comprehensive strategy to meet a higher ethical framework.
Background
Apple’s tremendous success resulted from its introduction to the smartphone industry. In addition to its beautiful design and innovative features, Apple’s products are distinguished from its rivals by technology infrastructures such as iOS and iTunes. According to Giachetti (2018), the iPhone’s high price results from Apple’s dominant marketplace position, which boosts Apple’s income and market capitalization. In addition, Apple has a sizable client base that frequently purchases PCs and devices within the same platform. Apple mainly subcontracts manufacturing to Foxconn and Pegatron in China to optimize earnings and minimize operational costs. Apple’s 2013 sales revenue was $170 billion, whereas Foxconn’s was $131.8 billion (Kubota et al., 2018). Along with allegations of employee tragedies at Foxconn, a BBC documentary alleged Apple disregarded workers’ entitlements, tarnishing Apple’s corporate identity.
Apple promised to accept responsibility for the issue. Unfortunately, the situation did not differ at Pegatron, where Apple moved most of its production operations following the incident at Foxconn. Still, laborers were confronted with excessive overtime, exceedingly low wages, and deplorable working conditions. Although the public was informed, client excitement remained high, and revenues rose (Kubota et al., 2018). Apple is currently confronted with two contradictory requirements: the desire for change from opponents of the staff’s rights issues and the need to continue serving the expectations of mainstream consumers and conducting business as usual.
Identification of Issues
Clients, personnel, stockholders, and distributors, among others, influence and drive Apple’s company, which is also impacted by their diverse opinions and objectives. Apple’s primary challenge is to strike a balance between increasing profit for the benefit of shareholders and sustainably conducting business, particularly inside its supply chain in China. Apple’s operating costs are reduced through low salaries and exorbitant longer hours, at the price of laborers’ privileges and possibly the firm’s image (Gurman & Bloomberg, 2019). Apple’s ability to adequately monitor human rights infractions is made more difficult by the corporation’s scale and the quantity of production workforce within its supply chain.
In addition, cultural variations between China and the United States contribute to the difficulties of monitoring employees’ rights, primarily due to different social conventions, laws, and organizational cultures. As Albergotti (2019) mentioned, Apple has been embroiled in many controversies about workers’ rights; guaranteeing that CSR is at the forefront of Apple’s goal is essential. Foxconn gradually lost orders from Apple when it improved its labor procedures, demonstrating that employees’ rights were not an important management concern. Ultimately, the management’s obtuse and deceptive methodology to CSR has broader ramifications for the rights of Apple employees and the larger group in which the company functions.
Analysis
A company is an independent loop that experiences environmental uncertainty and risk and depends on its communication processes and resources. Apple is not averse to the reality that internal and external influences influence its logistics operations. Politically, the United States and China have distinct limitations and possibilities for creating suitable employment costs and workplace conditions. Economically, Apple is responsible to its stockholders to maximize profit; socially, Apple is under pressure to assume responsibility for the people in its supply chain. Apple’s ability to harmonize standards for staff in the two nations is hindered by its offshore activities in jurisdictions with distinct working cultures and customs. Americans generally focus more on work-life balance but laboring as much as possible to elevate life quality is ingrained in Chinese organizational cultures.
Consequently, the corporation faces a conflict of interest in its supply chain. Sodhi & Tang (2019) contend that profit-driven corporations will be less viable since buyers are more prepared to pay higher costs for socially responsible businesses in an era of heightened ethical sensitivity. Improving labor conditions and compensation within its distribution network could temporarily reduce the firm’s earnings, but failure to do so could result in potential legal and brand danger. Apple’s supply chain faces a significant challenge due to the disparity between its commitment to CSR and its activities in this area.
Apple’s moral framework is not uniform across all countries and businesses in which it has an involvement, despite its stated commitment. According to Barugahare (2019), ethical colonialism entails believing that behavior must conform to a global ethical norm. On the other hand, ethical relativism is predicated on the notion that a moral code’s applicability is context-dependent, thereby allowing businesses more freedom to develop their ethical guidelines for decision-making. Apple practices ethical relativism by compensating its Chinese vendors substantially less than it would probably pay an American equivalent. The company may conform to Chinese laws irrespective of domestic regulations by outsourcing its production.
Being socially accountable involves not only how a corporation distributes its profits but also how it generates those profits. Therefore, it is lawful for Apple to pay $1.50 per hour for employment costs in China, but it is immoral for Apple to allow people to work long shifts in poor conditions (Albergotti, 2019). Apple’s leadership must recognize shareholder interests and how the institution is managed due to the corporation’s position in the smartphone industry and the wider corporate world. However, Apple’s administration should also think beyond these limits and take responsibility for all procedures involved in producing its merchandise. This is essentially the result of Apple’s impact on other mobile sector leaders. By transferring some manufacture to Pegatron due to higher profit margins, Apple communicated to society that revenues continue to trump civic conscience despite Foxconn’s efforts to improve labor conditions.
Moreover, Apple’s management uses the legal distinctions between China and the United States as a justification for its procurement employees’ living and working environments. As outlined by Jia et al. (2020), the cross-cultural methodology provides a structure for executives to utilize culture as a rationale for their activities. Asymmetrical information along the supply chain separates management’s goals from their deeds. Consequently, Apple’s business culture grows unclear and deceptive. Jia et al. (2020) explore how the influence of culture on each employee of the organization can trigger the cultural transformation, mainly when the organization operates in different ethnicities. By fostering a culture of ambiguity, Apple’s personnel and supply chain partners may be tempted to perform neither encouraged nor permitted actions. Moreover, ethical culture is predominately rooted in perception in that its effects are typically self-reported. Apple’s global supply chain administration lacks a structure with standardized factors for measuring the integrity of its production process and determining how to tackle problems. Apple’s challenges are being handled in a manner that distorts the company’s culture and ideals, with far-reaching consequences for the market in which Apple participates.
Recommendations
The first component of Apple’s aim to enhance its prospective business operations would be to adopt reforms to its green supply chain. Apple cannot modify workplace practices and laws in all its vendors’ operating nations. However, the executive team can adjust the amount it compensates its contractors. Apple’s current payment strategy has made the corporation infamous, placing suppliers under obligation to produce more at lower prices. Foxconn and Pegatron had to negotiate for 1.7% and 0.8% earnings, respectively, contrasted to Apple’s 40% profits (Albergotti, 2019). Apple could efficiently distribute a percentage of its wealth more equitably to give its subcontractors more clout in enforcing higher labor standards, paying higher salaries, reducing operating time, and investing in safeness.
Apple may establish a minimum regular salary on what it pays equivalent employees in other jurisdictions to guarantee that its suppliers follow suit. In addition to increasing suppliers’ margins and establishing a minimum wage for suppliers’ personnel, a tougher execution of Apple’s wellness ethical guideline would emphasize the significance of corporate social responsibility (CSR) within the company and the broader society. Comprehensive inspection and surveillance of suppliers’ accounting records would be vital to achieving stricter aspirations for work practices and entitlements. If Apple had a consultant with skill and understanding in both civilizations whose job was to check these factors throughout the year, this would be easy to achieve.
In addition, initiatives to enhance employment conditions and identify future ethical concerns will be bolstered by gathering diverse groups and organizations in a forum to promote dialogue and partnership. Stakeholders would be able to communicate their opinions and concerns without apprehension of the consequences of their work at the forum. Improvements to Apple’s distribution network would also be considerably facilitated by improving the manager’s leadership technique. The top management should emphasize CSR in their mission and objectives, representing it as an integral component of their objective as opposed to a response to worker’s rights problems. This necessitates a shift on their part from moral relativism to ethical hegemony.
The administration could showcase its dedication to ethics in its supply chain by establishing internal selection criteria for professionally and socially conscious vendors. This would develop a measurable system of CSR monitoring. Apple should also consider consolidating its supply chain by decreasing the number of its outsourced subcontractors to obtain greater transparency and convey rewards more clearly. Suppliers whose revenues are significantly dependent on Apple’s acquisitions are inclined to consider Apple’s governance and beliefs, further stressing the importance of the executive team promoting and upholding their stated ideals.
Conclusion
The ramifications of Apple’s troubles are more burdensome than its competitors, given its standing in the sector. It is not only grappling with labor problems in its production process and how to undertake more CSR in the future but also with the reality that its conduct will directly influence the company ethos of other small and medium-sized firms throughout the globe. Therefore, this work proposes that Apple undertakes programs in its distribution network and administration techniques to address its supply chain management concerns at their source and propagates a workplace culture that fosters ethical conduct for future sustainability solutions.
References
Albergotti, R. (2019). Apple accused of worker violations in Chinese factories. The Washington Post. Web.
Barugahare, J. (2019). ‘Bioethical realism’: A framework for implementing universal research ethics. Developing World Bioethics, 19(3), 128-138. Web.
Giachetti, C. (2018). Explaining Apple’s iPhone success in the mobile phone industry: the creation of a new market space. In Smartphone Start-ups (pp. 9-48). Palgrave Macmillan, Cham.
Gurman, M., & Bloomberg. (2019). Apple admits breaking Chinese labor laws in the world’s largest iPhone factory. Fortune. Web.
Jia, Y., Wang, T., Xiao, K., & Guo, C. (2020). How to reduce opportunism through contractual governance in the cross-cultural supply chain context: Evidence from Chinese exporters. Industrial Marketing Management, 91, 323-337. Web.
Kubota, Y., Mochizuki, T., & Mickle, T. (2018). Apple suppliers suffer with uncertainty around iPhone demand. The Wall Street Journal. Web.
Sodhi, M. S., & Tang, C. S. (2019). Research opportunities in supply chain transparency. Production and Operations Management, 28(12), 2946-2959. Web.