1.

Identify the multiple levels of analysis at play for Apple as it addresses the corporate
social responsibility challenges in its supply chain

• Stakeholders and their objectives, particularly in terms of CSR

• Maintaining a good Buyer - Supplier relationship
• Challenge of different cultural, legal, political, social, and economic environments

Apple’s manufacturing and assembly of their products has led to Apple needing to work with
international suppliers. Working with international suppliers comes with the challenge of
different cultural, legal, political, social, and economic environments. Apple’s complex
international supply chain has landed Apple in the CSR hot spot. Apple has been in questioning
of the labor rights violation at their plants in Foxconn and in Pegatron located in mainland China.

Apple officials must consider key stakeholders such as: Customers/Consumers, Apple’s
Employees, Investors, Employees of Suppliers and Distributor when prioritizes and devising
their corporate social responsibility strategies. In the case of Foxconn and in Pegatron Apple
stakeholders differ in their analysis of how much attention should be paid to these labor rights
violations and what would be an appropriate level of resolutions.

Another challenge faced by Apple in this article is maintaining the buyer-supplier relationship.
Advantages in maintaining a healthy buyer-supplier relationship can be “less purchasing time
and effort required to establish price, can react quickly to changing market conditions, lower
procurement personal required”.
Disadvantages in an unhealthy buyer-supplier relationship is “expediting and monitoring
incoming quality, provision of minimum service by suppliers, supplier not motivated to invest
time and energy for development of buyer’s products, less effective performance by suppliers”.

2. Is Apple responsible for the alleged human rights violations that occurred?

Apple is indirectly responsible for the labor rights violations at Foxconn and Pegatron through
bullying of supply chain. The article provides Apple’s net sales and income from 2008-2014 and
though this data is evident that Apple is a highly profitable company. In other words, companies
would want to conduct business with Apple due to their highly demanded products which would
bring in continuous work and higher revenue for Apple’s supply chain companies. With
competition between companies for Apple’s business, these companies attempt to provide Apple
with pricing offers that are better than their competitors. Any business aimed to generate wealth
would want to aim for lower cost; therefore, Apple provides their business over to the ‘cheapest’
offering companies. What happens next? Apple’s suppliers have to now provide the promised
price to Apple, this causes the supplier company to trickle down the low pricing on to their
employees in forms such as: lower wage, child labor, falsifying work hours, not providing basic
healthcare or using cheaper methods that lead to high level of pollution.

The bullying aspect can be simply illustrated as Apple (has a lot of money and can provide
continuous work and revenue for contracted suppliers/manufacturers) this has companies
fighting for their business by providing Apple with their lowest plausible offer. However, Apple’s
contracted companies with the lowest priced offers has resulted in negative effects for employees
of those suppliers/manufactures. An example of this can be seen at Foxconn and Pegatron.

“It was suggested that Pegatron was willing to accept thinner margins than Foxconn, which in
turn allowed Apple to produce a cheaper version of the…. while not undermining its
profitability” (Lee 5). Apple switched business from Foxconn to Pegatron due to Pegatron
ability to provide tighter margins while not upsetting Apple’s profits. Apple already working
with Foxconn then switched their business over to Pegatron because Pegatron was provided to
accept Apple’s asking numbers.

3. Would onshoring, insourcing, or a combination of the two represent a suitable

response to Apple’s problems?

Onshoring, insourcing or a combination of both would be a plausible solution amongst many

others. The suitable response for Apple to take would depend on what is best for their company
taking into consideration stakeholders and their objectives, maintaining a good buyer - supplier
relationship, and challenges of different cultural, legal, political, social, and economic
environments. Onshoring/insourcing would be beneficial directly to the origin country of Apple
Inc.. If Apple choices this route then it would gain befits such as: “ease of communication,
greater level of control, responsiveness, and reliability, fewer cultural differences, locally
appropriate skill sets, political and financial stability” (Pearson 1). However, making the decision
to onshore could result in “more expenses, lack of required candidates/resource, cannot meet
demand, not reasonable for all products especially those not sold in the US” (Morgan 1). If this
was a route Apple walks down, then a more favorable suggestion for dealing with the labor rights
violations would be converging both onshoring and outsourcing. In other words, “combining the
strawberry, chocolate and vanilla flavors…is a Neapolitan” (Buenaventura 1). Apple could create
a ‘multi-source strategy.’ Using a multi-sourcing strategy Apple can incorporate both offshoring
and onshoring. For example, “With multi-sourcing, a company can choose the best vendor for a
given IT task. By outsourcing certain IT operations, the company can handle the most important
responsibilities internally” (Upcounsel 1).

4. If Apple continues on the current path, what should it do differently?

In the article “Apple and Its Suppliers: Corporate Social Responsibility” Apple’s labor rights
violations took place in mainland China the first incident with Foxconn and the second with
Pegatron. First and foremost, since this repeated labor rights violations happened in China, Apple
should not attempt to oversimplify their options such as “move manufacturing out of China. Take
a hands-off approach to worker welfare” (Elgan 1). In order for Apple to prevent future labor
rights violations it should “Aggressively chip away at the problems associated with contract
manufacturing with a program of iterative improvement, higher standards, constant audits and
growing transparency. Initiate an aggressive program of paying component suppliers and
contract manufacturers more in exchange for transparency, worker welfare and environmental
safeguards” (Elgan 1).

5. Is it reasonable for Apple to apply different ethical standards to different countries?

Due to socio-economic standards in different countries compared to the western world ethical
standards theoretically are caused to be different. For example, maximum labor standards in
developed nations are viewed as minimum labor standards in undeveloped nations. However,
this should not cut any slack to this day and era of ethics away from home. Provided Apple’s
financial statements in the last 3 year it is evident of Apple’s financial success (NASDAQ 1).
Due to Apple’s labor rights violations Apple should incorporate some of those revenues towards
common welfare of its labor. Applying ethics away from home, Apple should take into
consideration of “respect for core human values, which determine the absolute moral threshold
for all business activities, respect for local traditions, and the belief that context matters when
deciding what is right and what is wrong…in order to create ethical corporate culture”
(Donaldson 1). Given Apple’s stature it is apparent it is a leader in the business world and needs
to do its part in leading by example. Apple can achieve this by treating “corporate values and
formal standards of conduct as absolutes, creating conditions, guidelines for engagement of
suppliers, allow foreign business units to help formulate and interrupt ethical issues and support
efforts to decrease intuitional corruptions” (Donaldson 1). The power of public option in regard
to CSR in recent years has magnified. Society has a whole has become more united and socially
consciousness of CSR. Apple risks its brand reputation and the ill effects of this if it does not
continue to address and show evidence of their CSR missions. Apple can avoid
sabotage/discredit of its brand name by applying ethical corporate culture for all international
affairs.

6. Should firms such as Apple maximize their profits, or should they sacrifice some
profits to do good?

Firms should sacrifice some profits to do good because “The purpose of a business, in other
words, is not to make a profit, full stop. It is to make a profit so that the business can do
something more or better. That ‘something’ becomes the real justification for the business…..A
good business is a community with a purpose, not a piece of property” (Handy 1). The main
objective for businesses should not be only money but it should be to generate revenue to use
towards a business mission statement. Examples can be, employee bonuses, community projects,
charities, scholarships, etc. In other words, make profit in order to do something better.
A solution to the unfairness between shareholders and employees should be “dividends be paid to
those who contribute their skills as well as to those who have contributed their money” (Handy
1). Handy’s article “What’s a business for” claims that shareholders should not be valued more
over employees, and all business decisions should not only consider shareholders. In conclusion,
success should be measured in the outcomes the business provides for others as well as ourselves
instead of just the company’s numbers.

7. Have these CSR problems at Apple had a meaningful impact on the bottom line?

‘Doing good’ might be beneficial for society and CSR but cause negative effects for Apple’s
bottom line because “focusing on CSR strategies hurts companies financially because they aren't
devoting all their attention to investment opportunities. In the long run, this lack of focus on
increasing profits leads to losses for company shareholders” (Brooks 1). This argument can be
refuted by Reaping Returns from Community Investments statement “company's relationship with
the community can be critical determinant of its economic future” (Heymann 1). Heymann’s
article uses Associated Cement Company (India) and wholesaler (Costco) to demonstrate how
investing in communities yielded positive results for both the company and the surrounding
communities. A solution to the unfairness between shareholders and employees should be
“dividends be paid to those who contribute their skills as well as to those who have contributed
their money” (Handy 1). Handy’s article “What’s a business for” claims that shareholders should
not be valued more over employees, and all business decisions should not only consider
shareholders. In conclusion, success should be measured in the outcomes the business provides
for others as well as ourselves instead of just the company’s numbers.

8. What is the role of media, including social media, in shaping CSR expectations?

The power of public option in regard to CSR in recent years has magnified. Society as a whole
has become more united and socially consciousness of CSR. Media is a powerful social platform
used by both consumers and businesses. Media becomes the meeting grounds for both consumers
and businesses. Apple risks it’s brand reputation due to the labor rights violations and the ill
effects of this if it does not continue to address and show evidence of their CSR missions being
accomplished. Apple can avoid sabotage/discredit of its brand name by applying ethical
corporate culture for all international affairs and using “social media platform which has the
dubious potential to either promote or destroy any issue, including CSR campaigns” (Hughes 1).
Overall media has become a weapon for society to reveal and create pressures on a business for
humanitarian movements.

9. Does Apple face an industry-specific issue, or do the same issues appear in other
industries?

Labor rights violations is an issue that can be present in any industries that uses a labor process.
As mentioned in Lee’s article Barry Collings argues “why pick on us?...It’s not the only tech
company using cheap labor in Asian factories: in fact, show me one that isn’t. Panorama could
equally have substituted Apple for Microsoft. Samsung, Sony, or even a British firm such as
Tesco, which has its Hudl tablets made in the same factories as Apple does. Picking on Apple
because it’s the company that’s made a public commitment to improving workers welfare seems
a little perverse” (Lee 5). Collin’s argument is adolescent and points fingers at other company’s
‘doing the same thing.’ Given Apple’s stature it is apparent it is a leader in the business world
and needs to do its part in leading by example. Apple can achieve this by treating “corporate
values and formal standards of conduct as absolutes, creating conditions, guidelines for
engagement of suppliers, allow foreign business units to help formulate and interrupt ethical
issues and support efforts to decrease intuitional corruptions” (Donaldson 1). Pointing fingers
only illustrates a firm’s desperate attempt to darken the spotlight on their behavior and pass it on
to another. Apple has the finances to be the leader in CSR and can set standards for other
businesses to observe by. A business conducting unethical behavior is not a valid reason for
another business to do the same. Instead the aim should be to stop practicing or justifying
unethical corporate behaviors. Given today’s economy professional referees should be
inaugurated to mediate business partnerships and be the whistle blowers.

10. If you were in the position of Jeff Williams, what, if anything, would you do
differently?

In the position of Jeff Williams, I would allocate some of Apple’s revenues into smart contracts
in block chain management of their supply chain. “A smart contract is a digital contract that
self- executes when predetermined conditions are met” (Holder 1). Smart contact promotes
centralization of data so more people along the supply chain know exactly where their products
are coming from. Smart contracts can provide supply chains with accuracy, speed, security and
brand creating trust. Smart contracts in Blockchains can aid in the resolving the transparency
because it will allow parties on the blockchain to access full information on the blockchain, this
will address disclosure or restricted areas. Digitization of smart contracts will also eliminate the
data redundancy and accuracy because multi-party network will retain a single version of the
data. Smart contracts are also beneficial to supply chains looking to eliminate intermediaries.
Since blockchains will provide end-to-end. Walmart is an example of a business that has
implemented this strategy. According to Frank Yiannas, VP of Food Safety at Walmart, described
how he thinks application to food safety is the beginning, “⅓ of all food that gets produced is
wasted blockchain systems such as IBM Food Trust can allow you to optimize supply chain
efficiencies reducing food waste in store and at home.” -Walmart Requires Supplies to
Implement Tracking Systems. Blockchain allows companies to marry traditional accountability
through enterprise systems with live information from IOT devices across spectrum which
provides greater visibility to the supply chain and a digital ledger system that ensures these can
be trusted. Given Walmart’s incredibly complex supply chain, Frank Yiannas mentions how
blockchain systems can track food products anywhere in the supply chain in 2.2 seconds which
he describes as “food traceability at the speed of thought”. From the customer to the retailer to
the manufacturer. Connects end consumer to the products origins.
Future implementation - tracking waste management of products.