NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAM

ASSIGNMENT REPORT: BUSINESS ETHICS

Lecturer: Dr. Nguyen Bich Ngoc

Ha Noi, September 28st, 2022

Table of Contents
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I, Case summary................................................................................2
1. Introduction ..............................................................................2
2. Apple’s History .........................................................................4
3. Apple’s Corporate Culture ........................................................6
4. Apple Ethics...............................................................................7
5. Apple’s Ethical Problems...........................................................8
6. The Future of Apple’s................................................................14

II. Questions:
Question 1.......................................................................................15
Question 2.......................................................................................17
Question 3.......................................................................................19
III. Works Cited.................................................................................21

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Case 14: Apple Inc. Ethical Success and
Challenges
I. Case Summary

1. Introduction

Headquartered in Cupertino, California, Apple Inc. has experienced many

challenges throughout its business history. From 1997 to 2011 many things had

happened but Apple’s share price still risen from $3.30 to $339.87. Before

becoming a mega corporation as it is today, Apple had some hardships when the

company first started. They went through a few CEO’s and some up and down

before truly succeeding. Many companies have tried to compete, copied and beat

Apple with their products, but none have succeeded in doing so. 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

2. Apple’s History

Apple began with their first product, Apple I. Although it has some bugs and

lacked a few essential things like a graphic user interface (GUI) and buyers had to

add their own keyboard and display. Co-founder Steve Jobs convinced Wozniak

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that it could be sold as a commercial product. 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.

Jobs returned in 1997 when the corporation was on the verge of bankrupt with new

ideas to save the company. When he returned, a major thing he changed was

Apple’s “closed door” policy. This was to ensure employees could not take Apple’s

ideas and inventions to another company.

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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 Apple’s expansion into new product lines within the

electronics industry. The company began to make a comeback when they

introduced the iPod —a 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 Apple was renamed Apple Inc.,

since they were producing more than

computers but also a driver in consumer

electronics. Apple has begun to take

market share away from its top competitors

in the computer industry. Sales of desktops, laptops, and netbooks began to decline

after tablet computers were introduced. Analysts believe that tablet computers will

continue to grow at a rapidrate.

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3. Apple’s Corporate Culture.

Over the years, Apple made the transition from a computer to a consumer

electronics company which is unprecedented and hard to replace. This is based on

the fact that Apple owned highly skilled employees and its strong corporate culture

create evangelists who extensively promote the corporation products.

The concept of evangelism is an important component of Apple’s culture.

Corporate evangelists refer to people who extensively promote a corporation’s

products. Apple even had a chief evangelist whose job was to spread the message

about Apple and gain support for its products. However, as the name evangelism

implies, the role of evangelist takes on greater meaning. Evangelists believe

strongly in the company and will spread that belief to others, who in turn will

convince other people. Therefore, evangelists are not only employees but loyal

customers as well. In this way, Apple was able to form what it refers to as a “Mac

cult”—customers who are very loyal to Apple’s Mac computers and who will

spread a positive message about Macs to their friends and families.

When Jobs return to Apple, he instituted two cultural changes: He encouraged

debate on ideas, and he created a vision that employees could believe in. By

implementing these two changes, employees felt that their input was important and

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that they were a part of something bigger than themselves, which creates loyalty

among many at Apple. The unique corporate culture is what Apple take pride on, it

ensures potential applicants that the organization has a flat structure, the layers of

bureaucracy of other corporations. Apple also emphasizes that it does not adhere to

normal work environments in which employees are at their stations from 9:00 a.m.

to 5:00 p.m. Instead, Apple markets itself as a fast-paced, innovative, and

collaborative environment committed toward doing things “the right way.”

By offering both challenges and benefits to applicants, Apple hopes to attract those

who fit best with its corporate culture. Apple is also looking for sales employees

who fit well into its culture. Apple wants retail employees to feel welcome to all

consumers. Inside Apple's retail stores, there are stations where customers can try

and experiment with his latest Apple products. Staff are trained to speak to

customers within two minutes of entering. To help keep retailers' employees

motivated, Apple provides extensive training, higher compensation than similar

store employees, and manager genies (employees trained to answer more difficult

customer questions). Or offer opportunities to be creatives (staff members who

train through individual customers or workshops). Apple also offers young people

the opportunity to intern at Apple or become a school student representative.

Another advantage Apple offers is connecting employee concerns with

environmental concerns. To reduce the overall environmental impact, Apple offers

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incentives, such as public transit subsidies, to employees who choose to use public

transit. These incentives reduce employee fuel costs while reducing emissions to

the environment

4. Apple Ethics

Apple produces many of their products in other countries where labor costs are

cheaper. They make their suppliers sign a “Supplier Code of Conduct” in order to

keep doing business with Apple. This ensures that employees are being treated

correctly, not being over worked, and being paid for their time. Apple will then

release an annual report stating how their suppliers are doing to prove that they are

an ethical company. Apple has run into

some ethical issues such as product quality,

privacy, sustainability, intellectual property,

and patents. Apple has also taken action to

become a green company. They wish to

reduce the gases being released, and design

their products around environmental factors. Apple has also started a recycling

program for old electronics.

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5. Apple’s Ethical Problems

Despite the effort they put on to improve the work environment, Apple still faces

many ethical issues. These issues could have a profound effect on Apple’s sterling

reputation could easily be damaged by serious misconduct or a failure to address

risks appropriately. These issues include:

 Privacy

Apple in the past had gone through consumer tracking controversy. With the

increase in social networking, mobile devices, and Internet use, the ability for

companies to track customers is greater than ever before. For Apple more customer

information can help it better market its product and understand its customers.

However, the firm must still show respect for consumer privacy, and a breach in

privacy is likely to result in a backlash against the company.

In 2011 Apple experienced just such backlash, Apple and Google Certain features

of the cell phones they sell collect data about the location of the phone. Consumers

and government officials saw this as a violation of user privacy. These companies

have announced that users will have the option to disable these features on their

phones, as some phones continued to collect location information even after users

disabled the feature, which was not entirely true for Apple. Apple attributes this to

a bug they fixed in their new software. Both Google and Apple defend their data

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collection mechanisms, but many government officials disagree. The government

is considering passing a law on mobile privacy. This is a move that could have

significant effects on Apple and other electronics companies.

 Sustainability

Although Apple has taken step to become an environmental friendly company like

reducing the environmental impact of the facility. However, the company admits

that the majority of emissions come from its products. In 2009, Apple said its

activities contributed to his 9.6 million tons of gas emissions. 3% come from the

facility, while 97% come from the product lifecycle. Because Apple's success

depends on the constant development and introduction of new products, the

environmental impact of its products is a serious concern.

One practice some consumers criticize Apple for is planned obsolescence. It

encourages people to replace or upgrade their technology when Apple releases

updated versions. Apple is constantly releasing new products, so older technology

can be thrown away. Apple has taken several approaches to this problem. The

company builds its products from recyclable materials to make them last longer.

To encourage customers to recycle, Apple has established a recycling program for

old iPods, mobile phones and Macs in stores. Consumers who trade in their old

iPod can purchase the new version at a 10% discount. Consumers who recycle old

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Macs that still have value can receive gift cards. Apple works with local recyclers

that comply with applicable laws. Despite this recycling program, many consumers

find it more convenient to dispose of older products, especially those that have lost

their value. E-waste will continue to be a significant problem as long as consumers

discard old electronic devices.

 Intellectual Property

Intellectual property theft is a major concern for Apple, and an issue the company

is actively pursuing. Apple is serious about keeping proprietary information

confidential to prevent other companies from stealing its ideas. This has resulted in

a number of lawsuits between Apple and other technology companies.

In 1982, Apple filed a lawsuit against the Franklin Computer Corporation, which

had a major impact on intellectual property law. Apple claimed Franklin's illegally

formatted copy of the Apple II operating system and ROM could run on a Franklin

computer. Franklin's attorney argued that some of the computer programs were not

copyrightable. The court initially sided with Franklin, but later overturned the

ruling. The court ultimately ruled that the code and programs are copyrighted. The

law gives technology companies broad intellectual property protection

Another notable case was Apple's lawsuit against Microsoft after Apple licensed its

technology to Microsoft. When Microsoft released Windows 2.0, Apple claimed

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that the license agreement only applied to Windows 1.0 and that Microsoft's

Windows had the "look and feel" of Apple's Macintosh graphical interface system

"GUI". The court ruled in Microsoft's favor and determined that the license did not

cover the "look and feel" of Apple's Macintosh GUI. Although the two had

similarities, the court ruled that Windows did not infringe any copyright or license

agreement simply because it resembled the Macintosh system.

The other two lawsuits involved more serious ethical issues on Apple's part. One

circled around Apple's use of the domain name iTunes.co.uk. This domain name

was registered by Ben Cohen in 2000. Ben Cohen used this name to redirect users

to other of his websites. Cohen eventually used this domain name to redirect users

to Napster, a direct competitor of Apple. Apple tried to buy Cohen's domain name,

but after negotiations fell through, the company appealed to UK registrar, Nomi

net. The first person to register a domain name usually acquires the rights to that

name. However, the mediator in the case found that Cohen had abused his

registration rights and unfairly exploited Apple. Apple was granted the right to use

the domain name, leading to complaints that large companies (Apple) were being

favored at the expense of smaller companies.

Cisco claimed that Apple had infringed its iPhone trademark. Cisco has owned this

brand since 2000. Apple and Cisco were debating whether Apple would allow the

use of the trademark. However, Apple withdrew from the discussion. The company
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has since opened a front organization, Ocean Telecom Services, and registered the

iPhone trademark in the United States, according to Cisco. Some stakeholders

viewed Apple's actions as an unfair way to circumvent the negotiated proceedings.

The lawsuit ended with both parties agreeing to use the iPhone name. However, his

Apple response to the situation remains controversial.

 Rioting

In early 2012 Apple stopped selling the iPhone 4s at retail stores in China. This

resulted in massive crowds waiting for 48 hours outside of the flagship store in

Beijing began to riot. The estimated crowd was upwards of 2000 people.

Customers waiting for the iPhone starting throwing eggs and harassed the

employees.

 Price Fixing

In July of 2013 a judge ruled that Apple had conspired to fix prices on electronics

books (e-books) in conjunction with five major book publishers. A federal judge

ruled that Apple was part of a deal that required publishers to give Apple’s iTunes

store the best deals in the marketplace for e-book prices for iPad, and Apple

received 30% of the proceeds (known as the “agency model”). Apple denies any

wrongdoing and association with this deal and plans to appeal the decision.

 Threats to Other Companies

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A document suggests that in 2007 former CEO Steve Jobs allegedly threated

former CEO of Palm Edward Colligan with patent litigation if Palm did not cease

and desist poaching valuable Apple employees. Jobs suggested each company

should respectively comply with the idea of not taking valuable employees away

from other companies. This “unspoken agreement” seems to have also included

companies such as Adobe, Google, Intel, Intuit, Pixar.

 Supply Chain Management Issues

Apple makes each supplier sign its supplier code of conduct and perform factory

audits to ensure compliance. In addition, Apple says it has trained over 1 million

workers about their rights, increased the number of suppliers it audits by 80 %, and

allows outside organization to evaluate its labor practices. However, in the last few

years serious supply chain issues threaten to undermine Apple’s status as a highly

admired and ethical company.

To meet the continuous demand of Apple consumers, products from the company

must be readily available. For Apple, most of these products are produced

throughout Asia, but more specifically within Foxconn factories in China. In the

past, multiple accusations pertaining to improper working conditions, underage

labor disputes, and worker abuse (which resulted in suicide) have come into

question.

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Additionally, despite its attempt to audit its factories and enforce strong supplier

compliance standards, over 50% of suppliers audited by Apple violated at least one

part of its supplier code of conduct every year since 2007. Suppliers claim that

Apple’s manufacturing standards are hard to achieve because suppliers are allowed

to keep more slim profit margin. Also they claim that Apple’s focus on the bottom

line forces them to find other ways to cut costs, usually by requiring employees to

work longer hours and using less expensive but more dangerous chemicals.

Because of this, mistakes and safety issues become more common, according to

the company’s own audits, 62% of Apple’s suppliers did not comply with working-

hour limits, 35% failed to meet Apple’s standards to prevent worker injuries and

32% do not follow hazardous-substance management policies. Under page

workers, falsified records, overcrowded worker dormitories, and other labor

violations. Apple claims it is significantly improving supplier condition and

becoming more transparent about its labor processes

6. The future of Apple

Apple appears optimistic about its future. The company has created a cult

following of consumers who are intensely loyal to Apple products. Apple’s

products or services are meant to offer superior solutions to those of competitors.

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With other threats of new and existing companies coming out with new and

improved products, they still have their loyal customers. These customers have

always and will always buy Apple products. In one of Apple's newest products,

Apple continues its foray into the music industry. The company struck deals with

record labels to introduce his iCloud, a service that allows consumers to create and

listen to their own music collections without having to upload individual songs.

Google and Amazon offer similar music storage services, but Apple has more

songs available in her iTunes and deals with its record labels. Seize these

opportunities to increase Apple's share of the music and consumer electronics

markets. They are constantly working on producing a new product to benefit their

customers and to stay ahead of the game of evolving technology. In the last decade,

Apple has excelled at keeping pace with the quickly evolving industry of

computers and consumer electronics. Its diversification, collaborative corporate

culture, and product evangelism propelled it to heights that could not have been

envisioned when Jobs and Wozniak sold their first computer kit in 1976. The

company shows no signs of stopping its momentum, while consumers have shown

no signs of reducing their admiration for Apple.

II. Question

1. Explain how Apple’s philosophy and organizational culture have

they’re company by practicing high form on integrity throughout their business

endeavors and they seem to try to handle ethical issues how it is best for the

company as a whole. For example, being a green company is very important to

some customers, and it may be the decision of whether or not to support that

company. In response, Apple began measures to become a greener company by

reducing gasses that are released and introducing an electronic recycling program.

Apple keeps up to date on any threats on the company itself from companies like

HTC, Microsoft, and most recently Kodak. The company prides itself on having

quality products. In order to keep up with this reputation, they try their best to stay

ahead of glitches, and they are fixed as soon as they are found. Many believe that

a big part of Apple’s success is because of the CEO, Steve Jobs’, work ethic.

When the CEO of one of the biggest companies in the world like company sits

down and listens to your idea while you’re just a customer service representative or

even an intern, that makes you feel that you can achieve things beyond your

capabilities, and that is what Steve jobs has imbedded in the roots of the company

and till this day because in the past no matter how many times he failed or a

product failed, he always came back to try again. This shows the rest of the

employees at Apple that mistakes are OK, and they can be corrected and come

back stronger.

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2. Why is Apple’s industry so
competitive and how could this
affect the ethical risks in
Apple’s operations?
2. Why is Apple’s industry so
competitive and how could this
affect the ethical risks in
Apple’s operations?
2. Why is Apple’s industry so competitive and how could this affect
the ethical risks in Apple’s operations?

Apple's industry is one of the most competitive. The technology industry has a

fiercely competitive scene and Apple has a wide range of products related to

technology. It is found in various industries such as computer industry, mobile

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phone, music download industry, etc. Perhaps the company's biggest competitors

are in the mobile phone industry, where it has revolutionized the way people use

mobile technology. It has integrated different technologies into one product. The

mobile phone can perform multiple functions and resembles a minicomputer.

Today, most of what people use has been automated, changing people's lifestyles.

Nowadays, people want gadgets that make their life easier and save time. They

want innovative mobile devices that give them the freedom to work and

communicate. Many companies are aware of this and are developing products to

meet this need. This has increased competition within the industry. Competition

fuels business. Efficiency and productivity are increased, and in most cases,

product prices are reduced. When an industry is highly competitive, companies

tend to go all out to secure a large market share.

This could affect the ethical risk in

Apple’s operations in a few ways.

Firstly, Apple could “lose sight” of

their out of country operations. They

could have them sign the Supplier Code of Conduct, but they may stop enforcing it

so much. The case states that Apple does random audits to make sure their

suppliers are working under the correct and legal working conditions, but they

could skip that step and just assume since the agreement is signed, it is happening.
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Secondly Apple could also push their suppliers to work faster to produce their

products. The suppliers could begin taking short cuts to make the product quicker,

which could decrease the value of them. The product may not last as long, or have

more bugs in it. In turn, this could affect the customers. If they receive a new

phone that still has kinks that need to be worked out, they may not be a happy

customer and may leave the Apple name for another brand. Apple has also been

accused of hiring cheap labor, which in itself is unethical. Some of the company’s

products are manufactured in Taiwan, where the employees work in abusive

conditions (Leonard). However, it is important to note that the company has

managed to stay all these years with only a few scandals that touch on ethical

standards. This is because the company has instilled upon its employees to conduct

themselves right irrespective of the circumstances.

3. How do you think Apple has handled the various ethical issues
that it has faced in the past?

I think Apple has responded well to most of the ethical allegations made against

the company. For example, it had ensured not to use toxic chemicals in

manufacturing products. Most toxic substances such as fluorescent lights have

been replaced by light-emitting diodes that do not require mercury for lighting. In

addition, the company has established a recycling program aimed at recycling old

electronics to reduce improper disposal and ensure the sustainability of the rapid
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innovation in electronics, making old electronics obsolete.

herefore, recycling program ensures that materials used in older electronics are not

wasted, as some materials are still usable. This means that environmental concerns,

which are important issues for many companies these days, and sustainability in

development and innovation, are taken into account. Remember, through programs

like this, Apple has acted ethically in addressing this ethical issue. All the more so

given that customers offer discounts and gift cards to exchange their old or

working devices for new or updated devices. Moreover, while this would cost the

company a lot of money, the move is an example of a company dealing with

ethical issues on a scale similar to the impact it would have if left unaddressed.

Apple is also definitely reducing its carbon footprint by offering free transfers. This

means that the employee does not have to use the car to commute, thus not

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increasing CO2 emissions in the atmosphere. Recently, the company was accused

of making its Taiwanese employees work in appalling and abusive conditions.

Some workers complained that they were forced to work more than 60 hours a

week, more hours than required by law. Additionally, some workers claimed that

their children were allowed to work in the company. Management responded and

resolved the issue by changing working conditions at the affected factories.

Finally, another ethical issue the company occasionally faces is privacy. After the

company, along with Google, revealed that the phones sold collect data on the

phone's location. This made customers feel their privacy was violated. The

company fixed the problem by introducing software, but some complain that the

problem still persists after Apple says customers can choose to turn the software on

or off. This has prompted the government to consider passing new legislation on

the matter. This will definitely affect the company. This is one area where Apple

has not fully resolved ethics-related issues. However, the company has dealt with

majority of its ethical issues well.

III. Works Cited:

Daniels Fund Ethics Initiative. Apple Inc’s Ethical Success and Challenges.

University of New Mexico.

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Enderle Rob. Apple and the Ethical/Business Problems of Child Labor and

Other Unsavory Practices. itbusinessedge.com, Mar 1, 2010. Web. May 7,

2012.

Ferrell, O. C. et al. Business Ethics: Ethical Decision Making and Cases. New

York, NY: Cengage Learning, 2010. Print

Leonard, Andrew. There is no Ethical Smartphone. Feb 23 2012. May 4, 2012.

Trevino, K. Linda and Katherine, A. Nelson. Managing Business Ethics.

Hoboken, NJ: John Wiley & Sons

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