Ethics and Corporate Social Responsibility of Apple Inc and Wal-Mart Stores - Essay Example

Ethics and corporate social responsibility of Apple Inc. and Wal-Mart Stores Student’s Name: Tutor’s Name: Course Code: Date of Submission: Ethics and corporate social responsibility of Apple Inc. and Wal-Mart Stores Introduction Apple Inc. is a United States of America based multinational was first incorporated as Apple Computer Inc. Apple Inc. designs, develops, and sells consumer electronics, computer software and personal computers. It was founded in April 1976 and incorporated in January 1977. The company’s first product was Apple I, which is enormously different from today’s Apple products. Apple I was a handmade computer kit which was constructed by Apple co-founder Steve Wozniak. Distinctly, the product lacked a graphic user interface (GUI), which necessitated buyers to add their own keyboard and display. Through the influence of Steve Jobs (co-founder) it was eventually launched as a commercial product at $666.66. The company continued to develop innovative products but faced difficult times in the 1980s. Internal conflicts were also experienced which saw Steve Jobs being ousted from the company. The company experienced stock declines and underwent several chief executive officer changes. The return of Steve Jobs in 1997 introduced new measures which included new company’s corporate culture, closed door policy and flattened organizational structure. The company also accelerated innovation and has since been highly competitive (Wal-Mart Stores Inc., 2012). The fist Walmart store was opened in 1962 in Rogers, Ark. However, Walmart was incorporated in 1969 and the following year had a national distribution. The stores were established on the basis of a concern that Sam Walton (founder) had on customers, he wanted to offer affordability through lowest prices anytime anywhere. In establishing Walmart Sam had high regard for his customers and employees. He sold a notion to employees that ‘working at Walmart had limitless opportunities.’ He always went ahead to encourage the sale associates to greet customers, look them in the eye while suggesting to help them; this was key to employee development, a trend towards supporting Corporate Social Responsibility. One of the famous statements of the founder was "It would, I'm sure, help you become a leader, it would help your personality develop, you would become more outgoing, and in time you might become manager of that store, you might become a department manager, you might become a district manager, or whatever you choose to be in the company…It will do wonders for you." This was a form of motivation (Boje and Rosile, 2008). By 2012, Walmart had over 10,000 stores across 27 countries and 200 million customers in the world. Wal-Mart believes in open door policy unlike Apple Inc. (Apple Inc., 2013). The two companies (Walmart and Apple Inc.) have a long history timeline and experienced struggles. The paper seeks to critically assess the companies’ ethics and corporate social responsibility in their operations and the society. Critical analysis of ethics and corporate social responsibility of Apple and Wal-Mart Apple Inc. has been increasingly commended for its innovative line of products and its ability to re-invent itself after years of struggle. The launch the iPod, portable music player set a stage for reinventing Apple’s wheel. This was followed by iTunes and iTune Store which enabled users to enjoy their favorite songs. In 2007 Apple Computer, Inc. was renamed Apple Inc. This signified that Apple was no longer just a computer manufacturer but also a driver in consumer electronics. Some saw this as a shift away from computers toward consumer electronics such as Apple TV, iPods, iTunes, iPhones, and iPads. This was also an indicator that Apple was reinventing computers. With the introduction of tablet computers such as the iPad, 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 rapid rate (Apple Inc., 2013). The success story of Wal-Mart in conquering the world is that of consistency. In each of the over 10,000 Wal-Mart stores that are to be found across the world, there are over one million products featured. In United States alone Wal-Mart has an estimate of 57,000 suppliers under contract (Schmitt, 2009). This could be traced back in 1994 when Wal-Mart created a supplier diversity program whose intention was to increase the number of minority and women owned suppliers of Wal-Mart (Corporate Wal-Mart- Suppliers, 2010). In this regard, the program has seen an increase in minority and women owned supplier businesses to over 2,500. Wal-Mart spends approximately $9.2 billion annually in doing business with women and minority suppliers (Corporate Wal-Mart- Suppliers, 2010). Wal-Mart’s success over the years can be narrowed down to a quote from Sam Walton (Wal-Mart’s founder) “You love it when a store exceeds your expectations, and you hate it when a store inconveniences you, gives you a hard time, or pretends you’re invisible” (Wal-Mart- Suppliers, 2010). Although some critics may differ with this, it could be said that is exactly how Wal-Mart has operated, by exceeding customer expectations and raising the bar for retail stores everywhere. In business, however, success is not just measured by profit; relations are critical to the operations of a successful company as well. As organizations that have been among the top of the Fortune Magazine 500 list of companies each and every year, Wal-Mart and Apple are constantly under public scrutiny. Over the recent years, Apple has been keen to try to ensure that its employees and those who they work with exhibit proper conduct in all operations. In assessing Apple’s success it could be hinged on innovativeness, high-quality products and services as well demonstrating integrity in every business dealings.” From Apple’s perspective four main principles are the pillars of integrity: honesty, respect, confidentiality, and compliance. In adhering to these principles in ensuring integrity Apple has outlined a code of business conduct that guides all its operations all over the world. In its effort towards furnishing the public with what the company does in its operations it has made available on its website more explicit policies as regards to corporate governance, director conflict of interest, and guidelines on reporting questionable conduct. Apple has also gone steps further in provision of Business Conduct Helpline to its employees that they can use to report any misconduct to company’s Audit and Finance Committee (Sawayda, 2011). Like Apple, Wal-Mart has detailed statements of ethics for its associates and directors which are hinged on three principles; respect for individual, service to customers and strive for excellence. In the light of these principles the employees of Wal-Mart are expected to always act with integrity, lead with integrity, and expect others to work with integrity, follow the law at all times, being honest and fair, reveal and report all information truthfully without manipulation or misrepresentation and work, actions, and relationships outside of individual’s work position with the company should be free of any conflicts of interest. The ethics guidelines also expect workers (associates and directors) to respect and encourage diversity, and never discriminate against anyone, swiftly report suspected violations of the Statement of Ethics, and cooperate with and maintain the private nature of any investigation of a possible ethics violation. The company provides helpline for reporting violations and guidance from the Global Ethics Office for help in case any worker has questions about this Statement of Ethics, or if you faced with an ethical problem. Both Wal-Mart Stores and Apple Inc. have elaborate supplier codes of conduct which are aimed at ensuring that the companies only engage in business with suppliers who have displayed high integrity. At Wal-Mart, there are ten standards that a company must conform to in order to be chosen as a supplier. These include compliance with laws, voluntary labor, hiring and employment practices, compensation, freedom of association and collective bargaining, health and safety, environment, no gifts or entertainment, conflicts of interest, and anti-corruption. There has been cited controversy in the Wal-Mart’s move to engage overseas suppliers whereby approximately 85 percent of the products that are displayed for sale on the shelves of Wal-Mart stores are from China (Davies, 2007; PBS, 2010). Wal-Mart has also been criticized for job cuts whereby from 2001-2006, the stores cut approximately 196,000 jobs in the United States and shifted the majority of its business operations towards importing products from China (Durand, 2007; Making Change at Walmart, 2011). The move to engage overseas suppliers has been cited and blamed for the expanding trade deficit between China and the United States, 11 percent (Chan, 2007). However, the main reason for the move is purely based on production cost (Chan, 2001). China’s business environment of doing business is quite favorable compared to the United States since there is adequate cheap labour and raw materials. This helps Wal-Mart to maintain a large profit margin while remaining consistent with its mission statement of “Saving people money so they can live better” (Moreton; 2007; Wal-Mart Stores Inc., 2011). Wal-Mart has committed itself to release annual statements of ethics in light of complying with the expected standards. Similarly, in emphasizing its commitment toward responsible supplier conduct, Apple Inc. releases an annual Apple Supplier Responsibility Report which elaborates on its supplier expectations as well as its audit conclusions and remedial actions the company will take against factories where violations have occurred (Appelbaum and Lichtenstein, 2004). Like Wal-Mart, most of Apple’s product components are manufactured in countries with low labor costs. Critics have also been particularly keen about the potential misconduct due to high differing labor standards and less direct oversight. In regard to this, Apple makes each of its suppliers to sign its “Supplier Code of Conduct” and performs factory audits to ensure conformity. In case of violation of the conduct as per Apple’s standards Apple Inc. may terminate additional business with such suppliers, as much as this shows high ethical standards it also supports corporate social responsibility by ensuring the societal welfare (Dean, 1999; Sawayda, 2011). In the light of multinationals seeking cheap labour especially in Asia, criticisms have been on the rise due to concerns of employees’ engagement. For instance, in achieving Wal-Mart’s foundation mandate, “lowest prices anytime anywhere” the company has sought to lower its labour costs by shifting most of its supplies from China consequently Wal-Mart has significantly developed presence in China. By 2006, Wal-Mart had a total of 68 stores served by 36,000 employees in China (Associated Press, 2006). Perhaps the interest has been on how china manages to supply Wal-Mart with the products it needs at very low prices? It has been established that several Chinese suppliers of Wal-Mart have endeavored avoided to pay necessary pay or provide obligatory benefits to their employees often through informal engagements (Associated Press, 2006). This practice has seen Wal-Mart to the courts in the case Doe v. Wal-Mart Stores Inc, 2006. The case was initiated by former employees from several overseas who were suppliers to Wal-Mart – China, Bangladesh, Indonesia, Swaziland, and Nigeria, as the plaintiffs (Washington Legal Foundation, 2009; Supreme Court of the United States, 2011). In their application, the plaintiffs argued that Wal-Mart had full knowledge of the prevailing failure of the foreign suppliers to conform to the minimum standards of labor and human rights yet it continued to engage these suppliers in business transactions (Washington Legal Foundation, 2009; Supreme Court of the United States, 2011). Wal-Mart argued that it should not be simply labeled as a joint employer since it has no power over the condition of the facilities in which the overseas employees worked or the wages and benefits that they did or did not receive (Washington Legal Foundation, 2009).The case was concluded in three years where the United States Court of Appeals mandated a ruling that offered workers of U.S. companies, protection from lawsuits over working conditions. In conclusion, the court held that overseas companies that supply United States companies could not qualify from this protection. Wal-Mart was not put off from foreign engagements by this court case, in fact it has tremendously expanded and has more than 281 stores and 10,000 suppliers in China (Mufson, 2010). The stores network is a clear indicator that Wal-Mart continued to conduct business with China and other foreign countries and has quadrupled its presence in China. In retaining their reputation and image, the company has opted to focus on environmental safety and conservation in its overseas facilities rather than lobby for better working conditions, benefits or wages (Mufson, 2010). Although this is an indicator of pursuing corporate social responsibility, it also shows a contradiction of the same by neglecting the welfare of the workers. This is seen as a diversionary tactic of public scrutiny from the primary issue. However, Wal-Mart has been keen in pursuing corporate social responsibility especially in its outlets such as Canada where it aims to attain 60 per cent more energy-efficient than its traditional refrigerated centres and project to save on energy costs by $4.8M over its first five years (Wal-Mart Stores Inc., 2011). Despite Apple’s consistent growth and success over the recent years, it has experienced several ethical issues. One of the most important attribute of Apple’s products is high quality. When Apple launched the iPhone 4, a stream of complaints was received from consumers concerning reception problems. It was established that the problems were as a result of antenna obstruction that was experienced when users held the phone a certain way. Instead of Apple swiftly addressing the problem it opted to minimize it. Apple provided free bumpers and cases for specified period of time after Consumer Reports failed to endorse the product. Although this did not stop millions from buying the product, it is a concern for future and may be an expensive experience for the company in future. In manufacturing its products Apple must always endeavor to be ethical and socially responsible, through provision of right quality products (Kahney, 2002; Shiu, 2005). Apple has also been criticized for violating privacy rights of their consumers where cell phones collect data on the phone’s locations. Apple claimed that such enabling features could be switched off but consumers established that collection of information continued even after disabling the said features. This concern has led the government to consider passing legislation on mobile privacy, actions which could have intense effects on Apple and other electronics companies (Sawayda, 2011). Although Apple is socially responsible through becoming a greener company, its operations have contributed to 9.6 million metric tons of metric gases being released; 3 percent from its facilities and 97 percent from Apple’s products life cycle. This shows a serious case for need to invest in corporate social responsibility to mitigate these results. In addition, there has been increasing criticism from consumers due to “planned obsolescence” where Apple pushes them to upgrade their devices with release of an updated version (Sawayda, 2011). Conclusion Although Wal-Mart Stores and Apple Inc. have elaborate ethics and corporate social responsibility standards they have not been fully adhered to (Besley and Peters, 2007). In light of this, they have been facing criticism due to diversions from the expected norms towards the societal good. The two companies may face immense challenges in the future for failure to completely adhere to the set laws and may cost them their sales and market shares. It is recommended that these companies have to address each and every criticism to build them. Otherwise, with the current advancement in the society today, it is likely that people will get fed up with their diversionary tactics and shifts their loyalty from their products. References Appelbaum, R and Lichtenstein, N. (2004). “The New World of Retail Supremacy: Supply Chains and Workers’ Chains in the Age of Wal-Mart.” International Labour and Working-Class History. 70, pp. 106-25. Apple Inc. (2013). Apple History. 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