Critical Analysis of Apple Inc.s PR Campaign - Case Study Example

Critical Analysis of Apple Inc.’s PR Campaign Critical Analysis of Apple Inc.’s PR Campaign Apple Computer’s Inc., the maker Mac personal computers, OS X and professional software, has a fairly long history of involvement in the global fight against AIDs. The history dates back to the 1990s (Funders Concerned About AIDS, 1999). However, it was in 2006 that the Corporation took its involvement a notch higher by joining the Red Campaign (discussed later in the essay). In November 2104, ahead of the World AIDS Day, Apple Inc., together with its software developer partners, launched a campaign that would see a portion of its sales proceeds donated to the Global Fund – a fund dedicated to eradicating AIDS, malaria and tuberculosis from the world (Apple Inc., 2014). That campaign is the subject of this essay. The campaign is analysed based on three groups of corporate social responsibility (CSR) theories: In terms of organisation, the author starts by providing a brief background to CSR theories. For each set of theories, the author gives an overview followed by an analysis of the campaign based on that set of theories. The author concludes by summing up the main points of the discussion. CSR Theories Beginning the second half of the last century, there has been much debate about corporate social responsibility (Dadush, 2010). At the centre of the debate was Bowen’s 1953 seminal book Social Responsibilities of the Businessman. Terminology has since changed from the social responsibility of a business to CSR. In addition, the field has grown significantly such that today, there exists a proliferation of theories, approaches and terms. Corporate accountability and social issues management are examples of terminologies that have since emerged. The proliferation of the CSR theories is not only confusing, but also complex and controversial. However, some scholars have helpfully attempted to clarify the situation and “map the territory” by classifying CSR theories and their related approaches into four broad categories: Instrumental theories that see the corporation as existing only to maximise profit such that everything else the corporation does, including CSR, is geared towards profit maximisation; Political theories that concern themselves with the power the corporation wields in the society and the responsible use of that power Integrative theories where the corporation is concerned with fulfilling social demands and; Ethical theories that claims that on ethical basis, the corporation owes the society some obligations. This essay analyses Apple Inc.’s campaign against all these theories except the integrative theories. This group of theories sees CSR only as a strategic tool for achieving the economic objectives of the corporation, notably, profit maximisation hence wealth creation for the owners of the corporation (Garriga & Mele´, 2004). Friedmans 1970 view captured the essence of instrumental theories: the sole social responsibility of a business towards society is for the business to maximise profits to its shareholders, provided that it does so within the existing legal and ethical frameworks of the country (Dadush, 2010). The problem with Friedmans view was that it was too narrow in its definition of "society"; according to Friedman the shareholders of the corporation constitute the society. This view is not only narrow, but also misleading. A few years later, T. Leavitt, a Harvard Business School professor would restate Friedmans view in an even more radical way. In effect, Leavitt claimed that a business exists solely to maximise profits and must, therefore, not contemplate anything that does not lead the maximisation of profit. The controversial sentiments notwithstanding, instrumental theories have long been widely accepted (Garriga & Mele´, 2004). Some variants of this group of theories include; The maximisation of shareholder value (measured as share price) – any social investments that have the potential to increase the shareholder value should be made, otherwise they should be avoided, Strategies for gaining competitive advantages – if an investment in society will give the corporation the upper hand over its competitors, then it should be made, Cause-related marketing –marketing activities in which the organisation commits to contribute a percentage of the sales proceeds to a specific cause such as, in the case of Apple Inc., the fight against AIDS. Application to Apple Inc.’s Campaign There is compelling evidence, both in the campaign under review and elsewhere, that the campaign is consistent with the instrumental group of theories. The campaign under review is a part of the Red Campaign, a cause-related marketing approach to CSR. Apple Inc. has been a part of the Red Campaign since its (the Red Campaign) inception in 2006 (Dadush, 2010). Since 2006, the Red Campaign has built the (Product) RED brand by partnering with major multinational corporations to raise money for the Global Fund. The partner corporations buy the right to use the Red label on one or more of their products. Once a partner buys the license, they substitute the word “Product” in brackets with their brand name. For instance, a Mac personal computer model participating in the Red campaign would be named (Mac)RED. The partner then sends a proportion of the proceeds from the sale of the RED labelled product to the Global Fund. The Global Fund in turn uses the money to fund AIDS programmes in Africa. The RED label has since become very common, appearing on a myriad of items such as packets of coffee beans, t-shirts, computers and strollers. The campaign under review also represents a cause-related approach to CSR. In the campaign, Apple Inc., in collaboration with leading computer and mobile application developers, invited its customers to help it attain the goal of a generation free of AIDS (Apple Inc., 2014). Apple’s customers were encouraged to join in the worthy cause by, over the two weeks that followed the launch of the campaign, buying one or more of 25 exclusive apps via a dedicated section of the App Store dubbed Apps for “(RED)”. In turn, Apple promised that all the proceeds from the sales would be donated to the Global Fund. In addition, the personal computer maker promised to donate a percentage of all its retail and online sales on two days - November 28 and December 1 - to the Global Fund. As at the launch of the 2014 campaign, Apple had donated $75 million dollars to the Global Fund, winning the praise of the founders of the Red Campaign (Apple Inc., 2014). Despite the hype about the Red Campaign, however, there have been concerns about the effectiveness and accountability of the campaign (Dadush, 2010). Certain features of the Red model render it difficult to assess the effectiveness of the campaign. Usually, information is available to the public about how much money each government or private sector actor contributes to the Fund and how those contributions fluctuate from one year to the next. This is not the case for the Red model; rather than report the individual contribution of each participating partner, the Global Fund aggregates the contributions of all partners. In the absence of disaggregated data, it becomes difficult for customers who buy RED-branded products to know the extent to which their product provider is keeping the promise of donating part or all of sales proceeds to the Global Fund. The closest the Global Fund has gone in ensuring effectiveness and accountability in the Red model is developing and availing on its website what it calls the “Impact Calculator”. However, this tool has a major limitation: it displays only converted amounts, presented as the number of days of medication. It is silent on the amount of money that finds its way to the Global Fund as a result of a consumer buying a RED-branded item. This situation can easily make consumers who are kin on supporting charitable causes feel cheated and stop supporting those causes (Dadush, 2010). Political Theories This group of theories focuses on the power that a business wields in the society in which it operates and the way the business uses that power responsibly (Dadush, 2010). Although there is a myriad of approaches in these theories, two stand out: Corporate constitutionalism and; Corporate citizenship. The notion of corporate constitutionalism is attributed to Davis. He argued that as social institutions, businesses wield social power and must use that power responsibly. Davis also noted that the firm derives its power not only from internal, but also external sources. Whereas a firm derives its power primarily from its power from the ownership of wealth, that locus is unstable and could easily shift due to the changing economic environment. An example is the established, long-standing American financial institutions that found themselves bankrupt and collapsing at the peak of the 2008 worldwide financial crisis (Dadush, 2010). Thus, it makes economic sense for a firm to diversify its locus of power away from its wealth. For a firm that has invested well in its community, for instance, the community could stand by it and see it through the hardest of economic times. The idea of the firm as a citizen is not new. However, certain developments in recent times have brought the idea to the fore. These developments include the phenomenon of globalisation, the deregulation process and reducing costs of doing business as a result of technological improvements (Garriga & Mele´, 2004). These factors have seen some multinational corporations wield more power than some governments. As a citizen, a firm has the right to certain basic services from the government such as roads and a conducive business environment. More importantly, however, the firm, as a citizen, has certain obligations to the government, society and the environment. Thus, CSR is a means through which the firm fulfils its obligations to the government, the society and the environment. Application to Apple Inc.’s Campaign Apple Inc. is no doubt wields considerable social and economic power. Some facts about Apple are: i. Apple is the second-largest IT company in the world after Samsung Electronics by revenue (Elliot, 2014). ii. Apple also falls third in the world as a mobile phone manufacturer. iii. It is the world’s largest publicly traded company by market capitalisation. In November 2014, Apple became the first American corporation to reach $700 billion mark. As of 2014, the Corporation employed close to 73, 000 people across its over 430 stores spread across fifteen countries. iv. The company also operates two online stores: Apple Store and iTunes Store. The latter is the world’s leading music retailer. v. The company’s annual revenue from its global operations stood at $ 182 billion(Elliot, 2014). vi. The Apple brand a high level of loyalty; according to Interbrand’s 2014 Best Global Brands report, the Apple brand was valued at $118.9 billion, making the brand the most valued in the world(Elliot, 2014). These facts demonstrate the power Apple Inc. Political CSR theories are concerned about the way in which the firm uses its power in a way that benefits the society (Schwartz & Caroll, 2003). By virtue of its influential position in the global IT industry, Apple has attracted a host of partners including app developer. In the campaign under review, Apple successfully wooed its app developer partners for a concerted effort in the fight against AIDS. The campaign lists an extensive list of RED-labelled apps, mostly games. The partners, like Apple, pledged to donate proportions of their proceeds to the Global Fund. Plausible as Apple’s initiative is, the challenges remain those of measuring the effectiveness of the initiative and ensuring accountability. Nothing in the campaign, as posted on Apple’s website, suggests a way through which the buyers of those apps can follow up with the developers to confirm that their pledges were indeed honoured. As it were, Apple and its partners, through the campaign, persuaded their customers to take leaps of faith: buy the RED-branded products in the hope that their providers would honour their pledges. However, this shortcoming of the campaign may not be blamed on Apple and its partners; its roots lie with the Global Fund for failing to put in place robust effectiveness and accountability measures. Ethical Theories This group of theories is concerned with the ethical considerations that underpin the relationship between a firm and the society (Garriga & Mele´, 2004). They are based on the principles that govern the right thing to do and the necessity of a good society. These approaches are explained under: The normative stakeholder approach to CSR is governed by two main ideas: a stakeholder is a person or a group of persons that has an interest in the activities of the firm and that the interests of each stakeholder possess intrinsic value that is, they deserve to be considered on their merit even if they are opposed to those of other stakeholders. Thus, a socially responsible firm pays attention to the legitimate interests of each stakeholder, not just the main stakeholders – the shareholders. However, it is unclear what constitutes a "legitimate" interest. Human rights have been embraced as a basis for CSR. A number of human rights-based approaches to CSR have been adopted. An example is the United Nations Global Compact that incorporates nine principles in the areas of the environment, labour and human rights. The notion of "sustainable development" became popular in 1987 following the publication of the "Brundtland Report" by the United Nations World Commission on Environment and Development. The Commission defined "sustainable development" as the development that meets the needs of present generations without compromising future generations ability to meet their needs in the same environment(Gladwin & Kennelly, 1995). There are three pillars of sustainable development – economic, social and environmental. Good CSR addresses all the three. The common good approach to CSR demands that as a member of the society, a business contributes to its common good. However, scholars differ on exactly what constitutes the common good(Alford & Naughton, 2002). Application to Apple Inc.’s Campaign In the campaign, Apple’s CEO, Tim Cook states that Apple proudly supports the Red Campaign because the corporation believes that life is the most important gift to a human being(Apple Inc., 2014). Like all other CSR initiatives, in order for the fight against AIDS to be sustained then finally won, there has to be steady funding (Garriga & Mele´, 2004). However, an examination of the campaign under review reveals no efforts to sustain the funds drive. In fact, the campaign clearly states that it was going to run for two weeks. Just as researchers are aware of research fatigue – the phenomenon where communities develop general apathy toward research and researchers as a result of being over-researched with no tangible benefits to match, Apple must have been aware of the possibility of “charity fatigue” if the corporation were to run the Red campaign all-year-round. Conclusion This paper sought to analyse Apple’s 2014 CSR campaign in support of the Red campaign to raise money for the Global Fund – a global fund dedicated to the fight against AIDS, tuberculosis and malaria around the world. The analysis was undertaken against three sets of CSR theories – instrumental, political and ethical theories. As far as the instrumental theories are concerned, the campaign was a strategic cause-related marketing tool for Apple and its partners. The tool enabled the corporations to fulfil their CSR obligations while increasing their profits at the same time(Garriga & Mele´, 2004). On the political theories, Apple successfully used it influential position as a global leader in the IT industry to mobilise its app developer partners for the cause. Unfortunately, in the absence of effective and accountability measures, one cannot tell the impact of the initiative. On ethics, Apple feels obliged to contribute to the sustainability of communities in Africa by eliminating the AIDS pandemic that threatens that sustainability. However, questions about over the short duration of the 2014 campaign. Overall, the campaign was consistent with CSR theories. 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