Corporate Responsibility and Marketing Strategies of Apple Inc - Assignment Example

Corporate Responsibility and Marketing Strategy: Apple Inc. of the Contents Contents 2 Introduction3 Discussion 4 Example of Ethical Responsibility 5 Example of Social Responsibility 5 Pricing and Acceptance of Apple Products 7 Conclusion 9 References 10 Introduction Corporate Responsibility is the strategy adopted by management of companies to incorporate social and environmental aspects into their business operations and in relation with their stakeholders whereas business ethics relates to complying with the ethical principles in each and every steps of conduction of business, applicable for all individuals and the organization itself. In this era of globalization and international trade where rapid technological progression and cut throat competition has become immensely important, priority has been exceedingly shifted towards corporate social responsibilities so that the companies can align their production and distribution process with social and environmental norms (Barnea and Rubin, 2010). In this paper, corporate practices of ethical and social responsibilities will be analyzed. For the purpose of study, the corporate social responsibilities exercised by Apple Inc. will be evaluated. Apple Inc. is a California based Multinational Corporation that designs and develops computer hardware and software, consumer electronics, online services etc. The mastermind behind this company was Steve Jobs who had founded the company in 1976. The company is famous for its iPod media player, iPad tablets; Mac line of personal computers, iPhone etc. iCloud, iTunes, App Stores etc. online services and iWork creativity, iTunes media browser etc. services has helped the company to achieve leading position in the market. In terms of revenue, Apple is the second largest Information Technology Company only after Samsung and in the mobile phone manufacturing segment, it is third largest. According to the reports on 2014, Apple is having 437 retail stores in more than 15 countries worldwide and appoints more than 72,800 permanent employees. Strong research and development, innovation and customer orientation of Apple Inc. has resulted high degree of brand loyalty for the company which has aided to achieve world’s Most Valuable Brand Award in 2014. Clearly, practices of corporate social responsibility of such huge brand as Apple Inc. must be exemplary for all other corporate operating in multinational platform (Apple.com, 2015). Discussion Apple Inc. is well known for its ethical and corporate responsibilities which the company has continued practicing since its inception and improved overtime. Apple’s ethical practices are reflected in the code of conduct followed by all its employees irrespective of situations. The company’s effort to innovate high quality products and services is simplified of by exercising four key principles adopted by the company such as integrity, honesty, confidentiality and compliance. The policies maintained by Apple Inc. related to corporate governance, employee misconduct, director’s conflict of interest, audit, finance and compliance reports are clearly documented and made available in the company’s website so that everyone directly or indirectly related to the company, can have an access to it. Considering social and environmental responsibilities, Apple has strived to ensure optimum utilization of energy and material sources to minimize wastage and fabricate the products in a more environment friendly way. Controlling emission of harmful toxins out of manufacturing of electronic goods for the sake of planet and people, recycling products, plastics and materials responsibly and managing environmental variables carefully through planting and protecting trees are some of the instances of corporate social responsibilities exercised by Apple (Bassi, Frauenheim and Costello, 2011). Two examples can be sighted to prove the ethical and social responsibilities of Apple Inc. Example of Ethical Responsibility During the period of 2011 and 2012, when Tim Cook became the CEO of Apple Inc. the number of audits conducted by the company had increased as much as 72% including 393 factory audits to obtain an insight on working procedure and work environment of 1.5 million workers. 28 of these 393 were mystery audits which had revealed the true picture of labour practices in factories. Critical audit had also been done on bonded labors. These were not independent audits; the auditors interviewed the workers at the factory sight and workers were encouraged to disclose their true position so that the company can take corrective measures towards well-being and improvement of the labors’ conditions. Such effort taken by Apple Inc. proves the company’s inclination towards its ethical responsibilities (University of New Mexico. 2005). Example of Social Responsibility Emphasis on corporate social responsibility has been more prominent in Apple mainly after the death of Mr. Steve Jobs when the new CEO, Mr. Tim Cook took over the responsibilities in 2011. Apart from technological innovation, Tim Cook infused a new vision into the company which includes Corporate Social Responsibility. Tim Cook took initiative for a dollar for dollar match donation with contributions of Apple employees for restoration and education of street children which had collected $10,000 in a year. This is a visible practice of CSR (Corporate Social Responsibility) made by Apple Inc. (Forbes, 2012). Impact that the Publication of Ethics and Social Responsibilities Violations made by Apple’s Suppliers Apple tries to incorporate ethical and social responsibilities in its relation with suppliers and supply chain managers. There are so many evident of violation of the ethical and social code of conduct recognized by Apple Inc. For instance in 2013, allegation had been put forward related to workplace safety, below standard factory condition, withholding of worker’s pay and many more for Chinese labors. To inquire about Apple’s own supply standards, around 200 employees were interrogated from the three factories of Shanghai and Suzou. The audit report has exposed the incidence of violating a large number of international and Chinese standards as well as standards of Apple’s own code of conduct by the Pegatron factories. Certain labor brokers were holding the worker’s ID and the workers were bound to work exceeding the 60 hours working period specified by Apple. Allegation has also been brought by the means of dumping metal cutting fluids into local drainage system. Such unethical practices made by Chinese supplying partners of Apple, largely disturbed the brand image of the company. The comprehensive audit results revealed that more than 28% of Apple’s suppliers do not comply with the prescribed wage and benefit standards, 38% of suppliers are not compliant with juvenile protection standard, 41% of them ignore ergonomic standards and no emphasis has been given to suppliers’ health and safety. Hence, the company struggled to re-establish its brand value. To ensure that the suppliers will adhere to wage and benefit standards, two methods Apple Inc. can appoint; these are, reducing work hours and deploying relevant training programs (Wind, 2008). Reduction in Excessive Working Hours Apple may introduce transparency in working systems of its suppliers by reducing their excessive work hours. Apple standardized the working hours by stipulating a 60 hour work per week. Such initiative helped the company to experience 92% of compliance in 2012 as compared to 38% in 2011 (Business Insider, 2013). Training Programs Apple can also manage the situation by providing massive training and development to create awareness among the workers regarding ethical issues and corporate governance as well as the rights, health and safety measures of the workers. Statistics have shown that the training imparted by Apple to 1.3 million workers made the workers 73% more aware regarding the privileges they should get. Hence, Apple can adopt the method of training and development in order to channelize its suppliers’ workers in the way of ethics and compliance (Schneiders, 2011). Pricing and Acceptance of Apple Products Apple adopts a premium pricing strategy i.e. keeping the prices of its products artificially high so that the customers in premium segment may perceive the inherent value of the products and tend to purchase Apple gadgets for the purpose of maintaining their premium position in the society. Such pricing strategy becomes successful when a company has an established brand value and loyal customer base. Both of these parameters appeared to be true for Apple. However, according to the third quarter reports of 2014, Apple is experiencing severe competition from comparatively low cost smartphone and tablet manufacturer Samsung which is approaching towards becoming the dominant brand in this industry. In this quarter, Apple experienced a 12% of market share whereas Samsung has been successful in capturing as much as 32% of the market share by the end of 2014. More specifically, with the growth in smartphone and tablet market, the sale of Apple’s product increased by 23% whereas Samsung experienced a sales growth of 46% (Financial Times, 2014). In a platform market such as smartphone’s, market share enhances brand visibility and the company with higher market share enjoys more visibility of its brand and gains a competitive advantage out of the market share. This holds true for Apple as well, as the company is experiencing a shift in the existing loyal customer base towards a more visible brand with exciting features. Hence, losing market share of Apple shows an alarming situation for the company to bring modification in its pricing strategy. Apart from that, with a premium pricing, Apple has to forgo the potential sales in emerging nations. Therefore, in recent times Apple is concentrating on adopting a price skimming strategy. This pricing strategy indicates keeping a premium price at the time of launching of the product and gradually lowering the price overtime. This type of pricing may help Apple to regain its lost market share as launching a product at a premium price will keep the brand image of the company unaltered and lowering price after a specified time period will enhance the affordability of the smartphone and tablets of Apple to the mid ranged service persons and the potential customers of emerging nations (Smith, 2012). Considering the overall situation of Apple, inference can be drawn that due to presence of strong competitors in the market segment, Apple’s customers are not really willing to pay more if Apple increases its selling price to provide better wages and benefits of the suppliers’ workers. Conclusion Considering the business ethics and corporate social responsibilities exercised by Apple Inc. and modification of its marketing strategy according to the changing market needs, it can be concluded that though the company is facing short term dilemma related to its pricing and marketing strategy, strong management practices of business ethics and code of conduct will help Apple Inc. to succeed and retain its leading market position overtime. If Apple continues to exercise such social responsibilities and business ethics, the brand value of the company will be enhanced and with slight changes in marketing strategy, the company will evolve as the best brand in the computer and telecommunications industry. References Apple.com. (2015). Environmental Responsibilities. Retrieved from http://www.apple.com/in/environment/. Barnea, A. & Rubin, A. (2010). Corporate Social Responsibility as a Conflict Between Shareholders. Journal of Business Ethics, 97(1), 71-86. Bassi, L., Frauenheim, E. & Costello, L. (2011). Good Company: Business Success in the Worthiness Era. California: Berrett-Koehler Publishers. Business Insider. (2013). Apple Should Be Furious That It Has Such A Tiny Sliver Of The Smartphone Market. Retrieved from: http://www.businessinsider.com/apples-incredible-profits-and-small-market-share-2013-5?IR=T Financial Times. (2014). Definition of corporate responsibility. Retrieved from http://lexicon.ft.com/Term?term=corporate-responsibility. Forbes. (2012). Has Apple Become More Ethical Since Steve Jobs Death A Year Ago? Retrieved from: http://www.forbes.com/sites/timworstall/2012/10/05/has-apple-become-more-ethical-since-steve-jobs-death-a-year-ago/ Schneiders, S. (2011). Apples Secret of Success - Traditional Marketing vs. Cult Marketing. Hamburg: Diplomica Verlag. Smith, G. E. (2012). Visionary Pricing: Reflections and Advances in Honor of Dan Nimer. West Yorkshire: Emerald Group Publishing. University of New Mexico. (2005). Apple Inc.’s Ethical Success and Challenges. Retrieved from http://danielsethics.mgt.unm.edu/pdf/Apple%20Case.pdf. Wind, Y. (2008). A Plan to Invent the Marketing We Need Today. MIT Sloan Management Review, 2(2), 5-8. Read More