Business Ethics - Research Paper Example

?Topic: Business Ethics: To what extent do you feel ‘big businesses’ should lead by example when addressing externalities such as environmental damage and pollution? According to a UN Report estimate, worldwide big companies are causing $2.2tn of environmental losses. Functions of top 3000 largest organizations, could figure out 1/3rd of profit loss if these organizations are compelled to pay for causing loss to environment. Currently, there is no provision by law to hold theses companies monetarily accountable, as reported in The Guardian (Jowit, 2010), quoting from a research by the UN. The Case of Apple Jonathan Watts (2011) has laid open the lid over the assumed business ethics of such big businesses as Apple Inc., for letting its overseas supply chain damage the environment and degrade the pollution. The leading Chinese environment group has blamed the IT tycoon of not adhering to transparency in its business operations because of which the workers are suffering on health issues and lack of transparency is also causing loss of environment. The statement by the 36 Groups working for the Green Choice Initiative has heightened the controversy over the company’s incapacity in ensuring that work ethics are adhered to in the factories where ipads and iphones are being produced. Environment violations by suppliers of big IT companies are occurring to the dismay of all, the cause of which needs to be confirmed; why workers are being forced to function in such environment that is poor in safety standards. A number of tragedies are occurring at the Chinese factories; workers are committing suicides and workplace poisonings are taking place from the heavy metal pollution. It is clearly evident that the Chinese labor is paid less and workplace safety and regulatory parameters are not enough relatively to the West (Watts, 2011). Although Apple’s supplier code of conduct vouches adherance to globally identified standards to further the cause of business ethics but accountability can not be determined by the third parties as companies like Apple do not share facts on the name of corporate confidentiality. Political confidentiality and red tape in government transactions has further deteriorated the working conditions due to non-transparency used as a cover. Apple is one of the 29 companies least interested to share relevant information about its suppliers. There are a number of companies working for Apple’s supply chain, involved in waste discharge violations. A dozen employees died unnatural deaths in Foxconn electronics in Shenzhen, a supplier of computer parts for Apple and other big IT companies operating through outsourced locations (Watts, 2011). Moren (2010) states that Apple is employing tactics such as issuing the progress report on supplier responsibility, coinciding it intelligently with the shareholders meeting. So that the company management could not be attacked aggressively by shareholders on the social responsibility issue, the report on supplier responsibility was issued just 2 days before the meeting. Apple like other American companies has been exploiting the lenient labor laws in third world countries, which can affect its reputation, as in 2006 the company’s image was tarnished with the news that workforce at Foxconn’s Langhua was working 15-hours a day and was forced to live in unhygienic conditions, as published by a British newspaper. The company level inquiry found evidence of the same and from thereon suppliers’ yearly auditing was strategized to check suppliers’ adherence to code of conduct. The audit conducted in 2009 outlines the reforms and precautionary steps taken by the company. In the near past, in 2009 Apple initiated training programs for assembly-line workers on various educational programs such as Supplier Employee Education and Development (SEED) among others, protection programs such as reducing recruitment fee, educating workers on their rights and audit programs on component making suppliers and nonproduction suppliers to the final assembly production units, assembling the finished Macs, iPods, and iPhones (Moren, 2010). As per the data provided by Apple on various audits, 72% units adhered to the labor and human rights practices, 76% to health and safety practices, 74% complied with the company’s environmental impact practices, 95% with its ethics practices, and 61% with its management commitment practices (Moren, 2010). Some “core” violations were discovered over Apple’s Supplier code of conduct, such as abuse, underage or forced labor, framed audit materials, intimidation of employees, and grave environmental hazards that were promptly attended to. The auditing rate of core issues has not been over 2%. Further, random wrong practices by suppliers include overtime practices, incorrect computing of overtime, pay below minimum wages, low benefits, partiality, risky working conditions, poor ergonomics, and negative environmental impact. Further, the company conducts quarterly appraisals of "Key Performance Indicators," such as checking workers’ capacities for training, injuries, and living conditions (Moren, 2010). Lasers (2011) blames it on the profit-greed of Apple at the cost of ignoring business ethics by such big companies as Apple, putting the onus on the bargaining tactics employed by Apple to reduce the manufacturing cost. As revealed by an anonymous functionary of such a supplier company of Apple, it rejected the contract of $1 billion from Apple for not committing largely its manufacturing capacity for Cupertino’s products. It shows the extent of bargaining Apple is ready to undergo to cut costs and make profits. Apple can go to any extent in new product launches, as not heard earlier, like putting secret electronic devices in boxes carrying shipment to trace any leakage by the factory workers in China. Such externality check on the company behalf is just crossing the limit; one can comprehend why an employee at Foxconn committed suicide after losing a prototype of a new iphone. The man was harshly beaten by the security staff before he committed suicide. It clearly states that under the cover of maintaining corporate secrecy, Apple is ignoring the human and work ethics that need to be followed at overseas supplier locations of the company. It also came to the notice that before pre-launch of its product it used tomato boxes to conceal the contents from public view, which is just crossing the limit; It given the inkling that if a company can be so aggressive and secretive in product launch, it can use such tactics with its overseas supplier companies’ staff by controlling the business functions from the remote management control. Such facts hardly come out. If one such fact is anonymously reported by supplier company consultant or functionary, there could be many possible irregularities committed in complicity with the company officials in the US. Arguments for using such aggressive business tactics for operations’ benefit can be offered by Apple, such as tracking demand at retail outlets by the hour and readjust daily demand as predicted and arrange parts using emergency mechanism. It seems that in the desire to earn profits, which were 40% in the past quarter relatively to competitor hardware companies profit in the range of 10 to 20%, it is not giving due attention on ethics issues. Yunyun (2010) traces the Apple story of becoming a leader in iPhone sale, going beyond LF and ZTE to come on the third position in the manufacturing of iPhone, iPad and Mac computer, as stated by International Data Corp. In the fourth quarter of 2011, Apple sold 37.04 million iPhones, capturing 8.7% of the market for cell phones worldwide. The credit or ironically the debit of producing huge stock of mobile phones goes to the Chinese workers who work round the clock and are exposed to the risky work environment that is affecting their health in order to meet the huge production targets. Not only the Chinese workers but the manufacturers are also being meagerly paid in comparison to the huge profits earned by Apple. A Scenario of Market discrimination On January 13th this year, the company was expecting its planned launch of iPhone 4S in China. The huge crowd gathered outside the retail showroom of Apple Beijing’s Sanlitun shopping area. Fearing violence, the marketplace was shut down but the crowd showed its anguish by throwing stones. See the reaction of Tim Cook, Apple’s present CEO to Bloomberg that “We thought we were betting bold. We didn’t bet high enough,” as reported during a conference call on January 24 when the company issued its first fiscal quarterly report in 2012 (Yunyun, 2010). Discussing Apple’s leftovers in the outcome of pollution, occupational diseases, abuse of labor and random industrial accidents, which are plaguing Apple’s sourcing companies in China, there is no doubt that Apple has been quite unpleasant and forceful with the supplier partners in settling business issues; its lethargic attitude towards pollution has increased the problems of the suppliers. This negligence of environmental issues from the ethical perspective demands instant action by the company to resolve them (Yunyun, 2010). Before the Christmas of 2011, an explosion shook the fourth floor of RiTeng Computer Accessory’s Shanghai plant, which supplied spare-parts for Apple’s electronic devices. The blast injured 61 workers seriously. Yet another incident at another supplier location took place in May 2011 in Chengdu, Sichuan Province (Yunyun, 2010). According to the pollution report, titled ‘The Other Story of Apple,’ published by the non-profit Institute of Public and Environmental Affairs (IPE) from Beijing in January 2011 by Ma Jun, the director of IPE, 11cases of workers’ poisoning were reported, inhaling n-hexane, a poisonous liquid cleaner, used to clean the touch screens of Apple devices (Yunyun, 2010). Ma criticized Apple for saying something and doing differently. Apple vouched for clean and safe working conditions, nice treatment of workers and dedicated manufacturing facilities adhering to global environment standards. To prove otherwise, two surveys were organized by IPE and other NGOs in 2011. Surveys revealed that 27 Apple-suppliers released beyond permissible limit poisonous and polluting waste into the rivers. From its small and big suppliers, Apple manages to earn huge margins to save costs. The outcome can be seen in suppliers’ using unethical means of completing the production targets such as compelling workers to work overtime, employing below-age workers, delayed payment to workers, and increasing the level of pollution (Yunyun, 2010). During an interview, the workers revealed that n-hexane helped increasing the work efficiency by evaporating fast relatively to alcohol-based cleaners but causes peripheral neuropathy, loss of sensation in body parts, and obstructs mobility and the sense of touch. It was found upon inspection that the room meant for cleaning the Apple’s electronic devices was from being an air-tight clean room; it was crowded, obstructing the movement of air (Yunyun, 2010). Environment use, loss, and damage so far has not been compensated by organizations the like of Apple indulging in such loss, which has crossed the limit of creating a crisis situation through pollution, loss of fresh water, fisheries and fertile soils (Jowit, 2010). As per the research organized by London-based consultancy, Trucost, it was revealed that approximated total loss was worth US$2.2 trillion (?1.4tn) in 2008 – an amount larger than the national economies of all but seven countries globally in that year. The amount of estimated damage equals to 6-7% of the organizations' total turnover, or an average of one-third of their margins, while some businesses would be much severely affected than others (Jowit, 2010). "What we're talking about is a completely new paradigm," remarked Richard Mattison, Trucost's chief operating officer and head of the report team. "Externalities of this scale and nature pose a major risk to the global economy and markets are not fully aware of these risks, nor do they know how to deal with them." The remarks of Mattison show the criticality of the situation, as at the least it is expected of big businesses to lead by example when attending to externalities of environmental pollution and damage, as in the case of Apple we find the organization is shrinking from its business ethics responsibilities (Jowit, 2010). The loss, as estimated by the report, is huge enough to form a humungous part of the profit margins of a large number of companies. The big question that arises is who will pay the cost, which would be decided by the hunger for policy formulators to impose the 'polluter pays' principle. The need of the hour is to search means to correct the system in stead of waiting for the economy to adjust. Incessant ineffective misuse of environment will create huge negative impact globally. References: Jowit, Juliette. World's top firms cause $2.2tn of environmental damage, report estimates’. The Guardian, 18 February 2010. Available from: http://www.guardian.co.uk/environment/2010/feb/18/worlds-top-firms-environmental-damage Lasers, Hoard. Apple's supply-chain secret? Technology, 3 November 2011. The Guardian. Available from: http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers-11032011_page_2.html Moren, Dan., May 2010. Apple cleans up its supply chain. Macworld, 27 (5). Available from: http://web.ebscohost.com Yunyun, Liu., 16 Feb. 2012. The sour apple. Beijing Review, 55 (7), p. 10-13, 4p. Available from: http://web.ebscohost.com Read More