BỘ GIÁO DỤC VÀ ĐÀO TẠO

TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN

----------

ASSIGNMENT
Subject: Business Ethics
Case 14: Apple Inc.’s Ethical Success and Challenges

BRIEF CONTENT
I. Case summary
1. Introduction
 2. Apple’s history
3. Apple’s corporate culture
4. Apple’s ethics
5. Ethical issues at Apple Inc
6. The future of Apple
II. Questions
1. Explain how Apple’s philosophy and organizational culture have
impacted how it handles ethical decisions.
2. Why is Apple’s industry so competitive and how could this affect the
ethical risks in Apple’s operations?
3. How do you think Apple has handled the various ethical issues that it
has faced in the past?
III. References
I. Case summary
1. Introduction
Apple Inc., with its headquarters in Cupertino, California, has faced several difficulties during
the course of its corporate existence. Even though a lot had changed between 1997 and 2011,
Apple's share price increased from $3.30 to $339.87. When Apple originally began out, the firm
faced several challenges before growing into the mega-corporation that it is today. Before fully
prospering, they went through many CEOs and had various ups and downs. Several businesses
have attempted to rival, copy, and outperform Apple with their goods, but none have been
successful. For many customers, the Apple brand stands for excellence, distinction, and
innovation. The brand is the most valuable brand in the world with a value of about $153 billion.
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 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.
In order to safeguard its technology and maintain the confidentiality of information, Apple is
still watchful today. Moreover, Jobs streamlined the organizational structure; he spoke directly
to people rather of going through many levels of management. Yet, one of the most obvious
shifts may have been Apple's entry into new product categories inside the electronics sector.
When they unveiled the iPod, a portable music player that irrevocably altered the music
business, the corporation started to make a return. The business also released iTunes, a
"jukebox" style program that let users organize and manage their own music collections by
transferring tracks from CDs to their Macs. Apple launched the iTunes Store two years later,
allowing customers to download millions of their favorite music for $0.99 apiece through the
internet.
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.
3. Apple’s Corporate Culture.
It took Apple a long time to make the unheard-of and difficult-to-replace move from a computer
firm to a consumer electronics company. This is predicated on the fact that Apple employs
highly trained workers, and that the company's fervent corporate culture fosters the development
of evangelists who vigorously promote the company's goods.
The idea of evangelizing plays a significant role in Apple's culture. Those who vigorously
advertise a company's goods are known as corporate evangelists. Apple even employed a chief
evangelist whose role it was to promote the company and get support for its goods. The duty of
an evangelist, however, takes on more significance as the word evangelism suggests. Evangelists
have a deep faith in the organization and will share their faith with others, persuading them to
share it with others. As a result, evangelists are devoted clients as well as workers. This allowed
Apple to create what it calls a "Mac cult" of users who are fiercely devoted to its Mac computers
and will tell their friends and family how great they are.
When returning to Apple, Jobs implemented two cultural shifts: He promoted discussion of
ideas, and he developed a compelling vision that his team could get behind. Employees at Apple
were more loyal as a result of these two improvements because they felt valued and that they
were a part of something greater than themselves. Apple takes pride in its distinctive corporate
culture, which assures prospective employees that the company lacks the layers of bureaucracy
seen in other firms and has a flat organizational structure. Apple highlights that it does not
follow traditional working conditions in which staff members report to their desks from 9:00
a.m. to 5:00 p.m. In contrast, Apple positions itself as a dynamic, creative, and team-oriented
atmosphere dedicated to accomplishing things "the right way."

Apple aims to entice candidates by providing them with both obstacles and rewards, depending
on how well they mesh with the company's corporate culture. Apple is also seeking salespeople
who can successfully integrate into company culture. Apple wants all customers to feel welcome
by shop staff. Customers may test out the newest Apple goods at stations located within Apple
retail locations. Within two minutes of arrival, staff members are taught to communicate with
clients. Apple offers in-depth training, more pay than comparable store workers, manager
genies, and other incentives to keep retail personnel engaged (employees trained to answer more
difficult customer questions). may provide chances for artistic expression (staff members who
train through individual customers or workshops). Also, Apple gives young people the chance to
intern there or work as a school student representative.
Connecting employee concerns with environmental concerns is another benefit provided by
Apple. Apple provides incentives, such public transportation subsidies, to staff members who
decide to utilize public transportation in order to lessen the total environmental effect. The
Cupertino location provides a complimentary bus service for employees to go between the
Apple headquarters and the railway station. Biodiesel is used to power Apple's free buses. These
incentives lower employee gasoline expenses while lowering environmental pollution.
4. Apple Ethics
Many of Apple's goods are made in other nations where labor is less expensive. To continue
doing business with Apple, they need its suppliers to sign a "Supplier Code of Conduct". This
guarantees that workers are treated fairly, aren't overworked, and are compensated for their time.
In order to demonstrate that they are a moral business, Apple will then publish an annual report
on the performance of its suppliers. Apple has encountered moral problems with its products, as
well as challenges with privacy, sustainability, intellectual property, and patents. Apple has also
made efforts to transform into a green business. They aim to lessen gas emissions and include
environmental considerations into the design of their goods. Apple has also launched a program
for recycling obsolete equipment.
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 has experienced consumer tracking controversies in the past. The capacity for businesses
to monitor clients is stronger than ever because to the rise of social networking, smart devices,
and Internet usage. More consumer data might aid Apple in effectively marketing its goods and
comprehending their clientele.
The business must still protect customer privacy, however, since a privacy violation is likely to
result in negative criticism.
When Apple and Google included certain features in the mobile phones they sell, there was
reaction in 2011. These capabilities collected information about the position of the phone. This
was seen as an invasion of user privacy by both consumers and government authorities.
Although certain phones continued to gather location data even after users removed the function,
which was not totally true for Apple, these firms have stated that consumers would have the
ability to disable these capabilities on their phones. There was an issue that Apple's updated
software rectified, according to Apple. While many government authorities disagree, Google and
Apple both defend their methods of data acquisition. A legislation governing mobile privacy is
being considered by the government. This action may have a big impact on Apple and other
technology industries.
 Sustainability
While Apple has made steps to become an environmentally responsible firm, such as lowering
the facility's environmental effect. The corporation does acknowledge that the bulk of emissions
originate from its goods. Apple claimed in 2009 that its operations were responsible for some of
the 9.6 million tons of gas emissions. 97% of the costs come from the product lifecycle, 3% from
the facility. The effects of Apple's goods on the environment are a major worry since the
company's prosperity relies on the continuous development and launch of new items.
Planned obsolescence is one activity that some customers hold Apple responsible for. As Apple
launches upgraded models, it encourages users to replace or upgrade their equipment. Since
Apple releases new items so often, outdated technology may be discarded. Apple has approached
this issue in a number of ways. To help its goods survive longer, the firm uses recyclable
materials in its construction.
Apple has launched a recycling program for used iPods, cell phones, and Macs in shops to
encourage people to recycle. Those who trade in their old iPods get a 10% discount on the new
model. Customers may obtain gift vouchers for recycling outdated Macs with remaining value.
Apple collaborates with neighborhood recyclers who follow the rules. Despite this recycling
initiative, many customers still choose to discard outdated items, particularly ones that have lost
value. As long as people continue to throw away outdated electronics, e-waste will remain a
serious issue.
Apple also promotes its success in lowering the amount of harmful chemicals in its products.
Steve Jobs said that Apple had stopped using cathode ray tubes that contain lead in its devices.
Light-emitting diodes (LEDs) rather than mercury-free fluorescent bulbs are used in the
company's iPod. The corporation has also stopped using polyvinyl chloride and brominated
flame retardants, two of his harmful compounds, in its products.
 Intellectual Property
Intellectual property theft is a major concern for Apple, and an issue the company is actively
pursuing. Apple takes seriously its need to protect the privacy of its trade secrets in order to stop
other businesses from stealing its concepts. As a consequence, Apple and other technology
corporations have engaged in a number of legal battles.
Apple sued Franklin Computer Company in 1982, and the outcome had a significant effect on
intellectual property law. Apple said that the illegally formatted Franklin computer could use the
Apple II ROM and operating system. Several of the computer programs, according to Franklin's
counsel, were not protected by copyright. Initially siding with Franklin, the court eventually
changed its mind. The code and programs are copyrighted, the court finally decided. The
legislation provides comprehensive intellectual property protection for technological enterprises.
Apple's lawsuit against Microsoft after the licensing of its technology to Microsoft is another
prominent instance. Apple said that the licensing agreement only pertained to Windows 1.0 and
that Microsoft's Windows had the "look and feel" of Apple's Macintosh graphical interface
system ("GUI") when Microsoft introduced Windows 2.0. The license did not cover the "look
and feel" of Apple's Macintosh GUI, the court found in favor of Microsoft. The court decided
that despite their similarities, Windows did not violate any copyrights or licensing agreements
because of how much it resembled the Macintosh operating system.
The other two complaints centered on Apple's more egregious ethical transgressions. Apple's
usage of the.co.uk domain name was the topic of discussion. Ben Cohen registered this domain
name in 2000. In order to drive visitors to other of Ben Cohen's websites, he adopted this
moniker. In the end, Cohen directed customers to Napster, an Apple direct rival, using this
domain name. After unsuccessful talks, Apple attempted to purchase Cohen's domain name and
turned to UK registrar Nomi net for assistance. Usually, the rights to a domain name belong to
the first person to register it. But the case's mediator concluded that Cohen had misused his
registration rights and improperly taken advantage of Apple. When Apple was given permission
to use the domain name, there were allegations that big businesses were being given preference
over smaller ones.
Cisco said that Apple had violated its trademark for the iPhone. Since 2000, Cisco has held this
trademark. Cisco and Apple were arguing over whether Apple would let Cisco to utilize the
trademark. Apple, though, left the conversation. According to Cisco, the business then
established a front company called Ocean Telecom Services and filed the iPhone trademark in
the US. Apple's activities were seen by several parties as an unfair attempt to go around the
established processes. Both sides settled the legal dispute by agreeing to continue using the
iPhone name. His Apple's reaction to the circumstance, meanwhile, is still debatable.
 Rioting
Apple discontinued selling the iPhone 4s in retail outlets in China in early 2012. As a
consequence, there were huge crowds waiting outside the Beijing flagship shop for 48 hours
before they started to riot. Over 2000 persons were reportedly present.
Customers who were holding out for the iPhone started throwing eggs and teasing the staff.
 Price Fixing
A court found in July 2013 that Apple and five major book publishers had colluded to control
pricing for electronic books (e-books). According to a federal court, Apple participated in a
"agency model" agreement that obligated publishers to provide the cheapest rates for iPad e-
books on Apple's iTunes store in exchange for 30% of the sales. Apple intends to appeal the
ruling and denies any wrongdoing and affiliation with this transaction.
 Threats to Other Companies
According to a document, former Apple CEO Steve Jobs reportedly threatened Edward Colligan
with patent action in 2007 if Palm would not stop stealing valued Apple workers. Jobs advised
that each firm should adhere to the principle of avoiding stealing valuable personnel away from
rival businesses. Companies including Adobe, Google, Intel, Intuit, and Pixar seem to have been
a part of this "unspoken agreement."
 Chain Management Issues
To guarantee compliance, Apple requires each supplier to sign its supplier code of conduct, and
conducts factory audits. Apple also claims to have educated more than 1 million employees
about their rights, to have raised the number of suppliers it audits by 80%, and to let other
organizations to assess its labor policies. But during the last several years, significant supply
chain problems have put Apple's reputation as a highly regarded and morally upright firm in
jeopardy. Products from the corporation must be easily accessible to satisfy the ongoing demand
from Apple customers. For Apple, the majority of these goods are made at Foxconn plants in
China, however some are also made elsewhere in Asia. There have been several allegations of
poor working conditions, child labor issues, and worker abuse (which led to suicide) in the past.
Additionally, over 50% of suppliers examined by Apple since 2007 have breached at least one
aspect of its supplier code of conduct, despite its efforts to audit its facilities and impose strict
supplier compliance requirements. Suppliers contend that Apple's production requirements are
challenging to meet since they are given a more restricted profit margin. Additionally, they
assert that Apple's emphasis on the bottom line compels them to find additional cost-cutting
measures, often by making staff work longer hours and utilizing less costly but riskier
chemicals.
As a result, errors and safety concerns increase. According to Apple's own audits, 62% of its
suppliers did not adhere to working-hour restrictions, 35% did not satisfy the company's
requirements to avoid worker accidents, and 32% did not adhere to hazardous-substance
management procedures. Overcrowding in worker dormitories, understaffing, and other labor
laws infractions. Apple asserts that it is dramatically bettering supplier conditions and increasing
the openness of its labor practices.
6. The future of Apple
Apple seems upbeat about the future. Customers have developed a cult following for Apple
goods and are fiercely devoted to the brand. Apple's goods and services are designed to
outperform those of other companies. They still have their devoted clients despite the danger of
competing new and established businesses releasing new and better items. These clients have
always purchased Apple goods and will continue to do so. Apple continues to enter the music
business with one of its most recent offerings. To launch his iCloud, a service that enables users
to build and listen to their own music collections without having to upload individual songs, the
business reached agreements with record companies.
Similar music storage services are provided by Google and Amazon, but Apple has more songs
available in its iTunes store and agreements with its record companies. Take advantage of these
chances to raise Apple's market share in the consumer electronics and music sectors. To better
serve its clients and keep up with rapidly advancing technology, they are continuously
attempting to create a new product. Apple has succeeded in the last ten years in keeping up with
the rapidly changing computer and consumer electronics market. When Jobs and Wozniak sold
their first computer kit in 1976, their company's diversification, collaborative corporate culture,
and product evangelism catapulted it to heights that were unimaginable at the time. The business
shows no signs of slowing down, and customers' adoration for Apple has not diminished.
II. Question
1. Explain how Apple’s philosophy and organizational culture have impacted how it
handles ethical decisions.
An organization's ethical decision-making processes are influenced by organizational culture.
The beliefs, customs, and traditions of the company are incorporated into its organizational
culture. (Ferrell et al., 181). The workers at Apple are devoted and enthusiastic about what they
do. They firmly believe in their business, and they go to great measures to spread the word about
it and their goods. Apple as a business thinks that all workers, regardless of their place or
standing within the company, should behave correctly in all circumstances. The business holds
that every employee should act with ethics by being truthful, deferential, obedient, and keeping
secrecy. This entails integrating these principles into every aspect of their business. All of the
company's ethical choices are based on these principles.
The business implements steps like lowering carbon pollution and composting to make sure it
conforms with environmental laws. All workers are provided with free transportation through the
business, and their vehicles run on biodiesel, which is thought to be more ecologically beneficial
because it emits less carbon dioxide. Products with lead, mercury, or other harmful substances
are not used by the business. The business makes sure that reusable materials are used in the
production of its goods. Additionally, it exhorts customers to return goods they are not using so
that they can be recycled. The business values treating its clients with regard. The staff members
make care to provide quick client service. They have various workers who handle client issues
and ensure that the demands of the customers are met. Despite maintaining a private mindset
throughout all of its activities, the business is honest in all of its transactions. They can safeguard
their company by doing this and maintaining their private and secrecy.
2. Why is Apple’s industry so competitive and how could this affect the ethical risks in
Apple’s operations?
One of the most cutthroat businesses is the one in which Apple operates. The technical sectors
are highly competitive. Apple works with many different goods, all of which involve technology.
It occurs in a number of sectors, including, but not limited to, the computer, mobile, and audio
distribution businesses. The market for mobile phones, where the firm has transformed how
people use mobile technology, may have the most rivalry. It has combined several innovations
into a single offering. Its mobile phones look like tiny computers and are capable of carrying out
numerous tasks.
People's lives have altered, and the majority of the items they use have become automatic.
People today want gadgets that will make their lives easier and save them time. They desire
cutting-edge mobile gadgets that will let them operate and interact without boundaries.
Numerous businesses have recognized this and are creating goods to fill this need. The degree of
rivalry in the sector has grown as a result. Business benefits from competition. In most instances,
it reduces the cost of the goods while improving effectiveness and output. When there is fierce
rivalry in a market, companies usually exert all of their efforts to maintain a sizable market stake.
Some managers may become frantic due to intense rivalry, in which case they may tolerate
unethical business practices. To guarantee the survival of their company, they might end up
doing something dubious. (Ferrell at al. 97). Sometimes managers set unattainable goals that they
expect their staff to reach because they are under pressure from fierce industry rivalry. When
workers are under strain to achieve these objectives, they may resort to illegal means of
accomplishing them. In some instances, supervisors may exert pressure on staff to meet goals
and may convey the notion that the end product is more important than the process used to get
there. (Trevino and Nelson 24). This indicates that the workers will make every effort to achieve
their goal and bring in the necessary earnings. Businesses frequently end up sacrificing their
moral standards in order to remain competitive. This has occasionally led to them reducing the
standard of their goods in order to reduce expenses. Businesses take this action in order to
provide customers with low costs.
Antitrust laws and other laws governing rivalry have been created in many nations with the
intention of safeguarding companies from rebellious rivals. This is due to the fact that some
companies' use of competing tactics results in decreased customer happiness. These rules forbid
cartels and differential pricing. They make sure companies uphold ethical business methods. The
level of industry rivalry may have an impact on the company's activities' ethical hazards. For
instance, there may have been a moral dilemma with the company's iPhone 4 due to the fierce
industry rivalry. The business did not spend enough time making sure that its goods were
functioning properly. One of the key facets of the business' processes is producing goods of the
highest caliber.
The business makes sure that clients get the most out of using its goods. Apple Inc. may have
weakened its goods as a result of the fierce rivalry it faced from firms like Samsung.
Additionally, Apple has been accused of using inexpensive labor, which is immoral in and of
itself. Some of the company's goods are produced in Taiwan, where the workers endure harsh
working circumstances. (Leonard). It's crucial to remember that the business has survived all
these years with only a handful of incidents that have ethical implications. This is due to the
company's encouragement of proper behavior among its workers under all conditions.
3. How do you think Apple has handled the various ethical issues that it has faced in the
past?
In my opinion, Apple has addressed the majority of the ethical complaints leveled against it
effectively. For instance, it has made sure that no harmful substances are used in the production
of its goods. Light-emitting diodes, which don't require mercury for lighting, have largely
supplanted hazardous materials like incandescent lighting. Additionally, the business has set up a
recycling program to recycle outmoded devices in order to prevent improper dumping and to
ensure sustainability because newer electronic advances make earlier ones useless quickly.
Because some of the materials used in older, outdated devices can still be used, having a
recycling program guarantees that they are not squandered. This indicates that it has taken into
account both the viability of advancements and advances as well as environmental concerns that
have lately been a significant problem impacting many companies. Consider that by
implementing such a program, Apple has handled this ethical dilemma in an ethical manner,
especially in light of the fact that they are giving customers discounts and gift certificates in
exchange for their functioning and outdated devices so they can swap them in for new and
updated models. Additionally, this will cost the business a lot of money, but it also shows that it
is managing ethical problems in a way that is comparable to the consequences of doing nothing
about them.
Apple has also made sure to lessen carbon pollution by providing cost-free transportation trips.
As a result, workers won't be required to use their vehicles to get to work, reducing the amount
of carbon pollutants released into the environment. The business once faced allegations that its
staff members in Taiwan were working in appalling and cruel circumstances. Some of the
employees claimed that they were expected to work more than the authorized number of hours
per week, which is sixty hours. Additionally, some of the employees asserted that minors were
permitted to labor for the business. (Enderle 2010). The impacted companies' working
circumstances were altered by the management in response to the issue.
Apple has also engaged in unethical practices related to product quality. Given that this is one of
Apple's marketing focuses, offering consumers subpar goods or ones with small flaws might
raise the incorrect red flags. Customers' poor coverage with the iPhone 4 was discovered.
Customers complained about the issue, which was caused by interfering with the radio when
handled in a specific manner. When Apple initially attempted to downplay the issue, it once
more came under fire. However, the business moved ahead and found a solution, initially
providing complimentary covers and cases for a while until the issue was fixed.
Last but not least, the business has occasionally struggled with an ethical privacy problem after
discovering, along with Google, that marketed cell phones do indeed gather data on the location
of the cell phone. (Daniels Fund Ethics Initiative 2011). Customers felt violated by this, which is
exactly what happened. Although some still claim the issue persists despite Apple's claim that
consumers could turn it on and off, the company addressed the issue by introducing new
software. The government is now debating whether to enact new regulations on the matter,
which will undoubtedly have an impact on the business. Apple hasn't been able to completely
address ethical problems in this area, which is one of the areas where it has fallen short. Apple
has also struggled to fully resolve intellectual property (IP) and trademark problems, which have
led to multiple legal disputes with rival tech firms. The bulk of the company's social problems,
though, have been successfully resolved.

III. References
Daniels Fund Ethics Initiative. Apple Inc’s Ethical Success and Challenges. University of New
Mexico.

Ferrell, O., Fraedrich, J. and Ferrell, L. (2015) Business ethics ethical decision making and cases.
Stamford: Cengage Learning.

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