Corporate Responsibility and Marketing Strategies: Apple Inc.
Ethics and corporate social responsibility are important in any sector of business and influence the reputation of a company and its sales. Business ethics can include many aspects such as hiring practices, working conditions, the style of advertising, etc. The current paper discusses Apple’s position on the company’s ethical and social responsibility as well as its achievements in protecting the company’s corporate image. Another part of the paper is devoted to the discussion of the effects of the publication on ethics and social responsibilities violations on the company’s reputation. Besides, the paper determines the methods of ensuring that suppliers follow wage and benefits standards. The essay also provides an evaluation of effects of raising the selling prices on customer’s loyalty. Finally, the paper researches the marketing strategy of Apple and offers a few recommendations for improving the company’s competitive advantage.
Current Position on the Company’s Ethical and Social Responsibilities
The company cares about each employee and tries to enhance the lives of workers through addressing such issues as “human rights and equality, education and environmental protection” (Apple Inc., n.d.). Thus, Apple Inc. focuses on accountability and improvement that determine the company’s key objectives. The organization constantly enhances its Supplier Code of Conduct, which allows improving working conditions to be safer and more ethical. In 2014, Apple performed 633 personal audits and then responded to cases of noncompliance. It means that the company increased the number of audits by 40% (Apple Inc., n.d.). Moreover, the company increases the involvement of employees through educational opportunities, particularly more than 861,000 people improved their knowledge, skills and abilities through Apple’s Supplier Employee Education and Development Program (Apple Inc., n.d.). For example, workers could attend free course of English and economics.
In addition, the organization requires the suppliers to treat their employees ethically on a regular basis. For example, Apple restricts the workweek to no more than 60 hours. In 2014, 92% of suppliers followed the requirement (Apple Inc., n.d). Apple also insists on following ethical hiring practices. Moreover, to protect the human rights of employees, the company decided to use safer minerals for manufacturing. Apart from the use of safe minerals, Apple encourages suppliers to establish health facilities for their employees. In 2014, about 870 projects started that aim to enhance working conditions in the premises (Apple Inc., n.d.). The company also launched a mapping program to control chemical processes.
The organization’s products and processes meet the highest environmental standards. For example, Apple helps to conserve resources, including ? billion gallons of freshwater (Apple Inc., n.d.). The company also educates managers to monitor air pollution as well as other aspects through the course lasting for eighteen months. To encourage other businesses to follow ethical and social standards, Apple regularly publishes its guidelines to suppliers. Therefore, the measures demonstrate that Apple realizes a range of ethical and social responsibilities and makes efforts to meet the community expectations. Moreover, the company shows improvements of the CSR aspects, which is proved by the statistics provided above. The most vivid examples are meeting the highest environmental standards for products and processes, as well as providing healthy and safe working conditions.
Impact of the Publication of Ethics Violations on Apple’s Reputation
The publication of ethics and social responsibility violations has had negative impact on Apple’s reputation. The company had the image of the business that managed to make a significant increase in the market for about fifteen years (Padilla, 2013). The world considered Apple as one the most profitable and valuable organizations, so the publication of poor working conditions has deteriorated the brilliant brand image. In particular, newspapers informed about job practices in the Chinese factories that were against local and national labor laws. Apple received millions of dollars due to unpaid overtime and forcing employees to work for eleven hours without any breaks (Padilla, 2013).
Also, there were publications about workers that wanted to commit suicide because of the high level of stress in the factory (Padilla, 2013). Other publications informed about terrible working conditions, low wages, forced labor and unsafe chemicals in the air (Padilla, 2013). However, despite the negative reports, the company is popular among customers. Therefore, the impact of the publication was not significant. In addition, the company is currently invests into spreading information about its efforts to support human rights of workers, their working conditions and environmental protection. Finally, Apple is not the only company that has the publication of ethics and social responsibility violations in the factories; thus, customers have learned to ignore the reports to some extent.
Methods to Ensure that Suppliers Maintain Wage and Benefits Standards
The first method to ensure that suppliers keep wage and benefits standards is to conduct quality audits for partners. Despite the increase of the audits’ amount by 40% in comparison with previous year, there are some reports that show the assessments do not reveal the objective information (Apple Inc., n.d.). Therefore, Apple needs to work on improving audits. Another problem is that the company does not punish suppliers for ethics and social responsibilities violations (Duhigg & Barboza, 2012). Although the company states that it requires the suppliers to solve the issues during ninety days and implements some ideas for preventing repeating of the violations, the situation does not seem to improve. The company promises to terminate relationships with suppliers that do not make changes. However, Apple determined violations in hundreds of audits but it has ended relationships only with fifteen suppliers since 2007 (Duhigg & Barboza, 2012). It means that Apple does not punish the suppliers that violate labor laws and regulations.
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The second method is to use a supply scorecard. The scorecard should contain such aspects as the number of corrective activities, the amount of overtime, RMA processes and the progress of wage and benefits standards (Apple Inc., n.d.). The method is not new for the company, but it lacks reliability. Apple Inc. needs to introduce the new ways of collecting data for the suppliers’ scorecards.
The Effects on Price Increase on Buying Patterns of Customers
One of the ways to improve wages and benefits for supplier’s workers is to increase selling prices for the finished products. However, Apple’s customers are comfortable with the current price; so the method is improbable. The assumption is based on the results of the national survey made by the New York Times. The assessment demonstrates that Apple is a desired brand, as fifty-five participants could not say anything negative about the company (Duhigg & Barboza, 2012). 14% of people admitted that the worst aspect about Apple was the high price of products. Moreover, only 2% of respondents complained about Apple’s foreign labor practices (Duhigg & Barboza, 2012). At the same time, experts state that only active position of customers against poor labor conditions could improve the situation with wages and benefits. For instance, customers’ demands to improve environment and treatment in factories of Nike and Gap forced the two companies to make radical changes. Apple’s executives also admit that the CSR depends on the customers.
Currently, the company has two alternatives. First, Apple can produce goods in comfortable factories with good working conditions. Second, the company can reinvent its goods every year and manufacture them faster and cheaper. The second option requires factories to excellent based on the American standards. Today, customers would prefer the second option. In fact, they worry more about a new gadget than about labor conditions in China (Duhigg & Barboza, 2012).
Marketing Strategy and Recommended Actions
As Apple has strong competition with Samsung, Google, and other producers of smartphones, it decided to focus on promoting innovative products. For example, the company has already launched iPhone 5S, low cost iPhone, iPhone 6 and improved iOS (Shaughnessy, 2013). Besides, Apple tries to expand its portfolio in order to attract varied customers groups, particularly people, who can make business around the corporation (Nielson, 2014), including iBeacons and iTV business ventures (Shaughnessy, 2013). It is necessary to mention that Apple’s approach to innovations has changed. Under Steve Jobs, the company focused on finding and nurturing one thousand or more employees that could make a difference in their organization. However, Tim Cook prefers discussing the new ideas with larger number of employees (Shaughnessy, 2013). Overall, Apple’s strategy is to make innovations in different ways all the time. The approach requires significant resources, which Apple enjoys (Shaughnessy, 2013).
Apple could take two actions to enhance its competitive advantage in the global marketplace. First, the company can choose to reduce prices to tap into big but poor markets. Apple has already tried to attract customers by lower prices through offering iPhone 5S and 5C, which was a successful experiment. However, the startegy requires Apple to change the company’s image and become mass-market producer. However, the company differs from other competitors by offering a great experience and a great product (Grobart, 2013). Low price has never been Apple’s objective. Moreover, there is a risk that it will lose its loyal customers in premium markets. Therefore, the best option is to promote just two low-cost smartphones – iPhone 5S and 5C for Chinese market; also, the price may be lower. Today, they cost more than the local brands and Chinese customers cannot afford to purchase them (Grobart, 2013). Reducing prices and further promoting iPhone 5S and 5C would enhance competitive advantage of Apple in China.
The second action is creating the competition. The idea is that other companies try to copy Apple through developing similar hardware and software (Grobart, 2013). The previous examples show Google that purchased Motorola Mobile and developed the Android headsets (Grobart, 2013). The tendency of copying the Apple’s ideas attracts attention of the market to new products and Apple through the marketing buzz. When other companies duplicate Apple’s products, they admit Apple’s importance, which improves the customers’ trust. Therefore, the ability to be a “fashion-maker” could be used for the company’s competitive advantage.
In conclusion, the analysis of Apple Inc. demonstrates that the company is interested in protecting ethics and corporate social responsibility. Moreover, the company has been improving its achievements in the CSR aspect. Despite the mitigation attempts, ethics and social responsibilities violations occur. Apple Inc. is a global brand, so information about cases of unethical treatment appears in the publication rapidly. The media coverage has negative impact on the company’s reputation. Particularly, the most common violation is poor labor conditions in the outsourcing factories. On the other hand, customers are not ready to pay more for products even if it could improve working conditions for employees. As for the current marketing strategy, Apple focuses on promoting innovative products. It also expended the product selection, particularly into the iTV technology. Apple could enhance the competitive advantage through two actions. First, it should expand the opportunities in the Chinese market. It would be reasonable to reduce prices for low-cost smartphones 5S and 5C in order to make them affordable for Chinese customers. Finally, the company needs to launch new competition to attract new customer as the other companies try to copy Apple’s ideas.