Question

Apple Suppliers & Labor Practices

With its highly coveted line of consumer electronics, Apple has a cult following among loyal consumers. During the 2014 holiday season, 74.5 million iPhones were sold. Demand like this meant that Apple was in line to make over $52 billion in profits in 2015, the largest annual profit ever generated from a company’s operations. Despite its consistent financial performance year over year, Apple’s robust profit margin hides a more complicated set of business ethics. Similar to many products sold in the U.S., Apple does not manufacture most its goods domestically. Most of the component sourcing and factory production is done overseas in conditions that critics have argued are dangerous to workers and harmful to the environment.

For example, tin is a major component in Apple’s products and much of it is sourced in Indonesia. Although there are mines that source tin ethically, there are also many that do not. One study found workers—many of them children—working in unsafe conditions, digging tin out by hand in mines prone to landslides that could bury workers alive. About 70% of the tin used in electronic devices such as smartphones and tablets comes from these more dangerous, small-scale mines. An investigation by the BBC revealed how perilous these working conditions can be. In interviews with miners, a 12-year-old working at the bottom of a 70-foot cliff of sand said: “I worry about landslides. The earth slipping from up there to the bottom. It could happen.”

Apple defends its practices by saying it only has so much control over monitoring and regulating its component sources. The company justifies its sourcing practices by saying that it is a complex process, with tens of thousands of miners selling tin, many of them through middle-men. In a statement to the BBC, Apple said “the simplest course of action would be for Apple to unilaterally refuse any tin from Indonesian mines. That would be easy for us to do and would certainly shield us from criticism. But that would also be the lazy and cowardly path, since it would do nothing to improve the situation. We have chosen to stay engaged and attempt to drive changes on the ground.”

In an effort for greater transparency, Apple has released annual reports detailing their work with suppliers and labor practices. While more recent investigations have shown some improvements to suppliers’ working conditions, Apple continues to face criticism as consumer demand for iPhones and other products continues to grow.

Discussion Questions

1- Should Apple continue to work with the suppliers in an effort to change practices, or should they stop working with every supplier, even the conscientious ones, to make sure no “bad apples” are getting through? Explain your reasoning.

2- Do you think consumers should be expected to take into account the ethical track record of companies when making purchases? Why or why not?

3- Can you think of other products or brands that rely on ethically questionable business practices? Do you think consumers are turned off by their track record or are they largely indifferent to it? Explain.

Answer 1

1. Apple should not continue with such suppliers since the company has a moral responsibility towards the society. If the suppliers are engaged in unethical practices Apple should refuse to work with them thereby impacting their business in a big way. Once that happens the suppliers will reduce their profits and adopt more ethical practices due to the fear of losing a large chunk of business which comes from Apple.

2. Certainly consumers should take into account the ethics adopted by companies. Just as companies are responsible for fulfilling their social responsibilities individual should contribute to the society by refusing to buy goods from such companies. Once that happens the companies will automatically start adopting ethical practices which will in turn benefit the consumers and the society as a whole.

Moreover other companies will take a lesson and will move towards ethical practices.

3. There have been cases where automobile companies have used low grade material or compromised on the engineering design of automobiles which has led to explosions and accidents. A case in question is that of Volkswagen being engaged in the pollution scandal. In spite of the damages the company had to pay the consumers still hold the company in good light. This is because the company enjoys a brand name and goodwill which is hard to break and which has developed over many years. Hence the consumers opt for different models rather rather than discounting the company as a whole.

Answer 2

There have been cases where automobile companies have used low grade material or compromised on the engineering design of automobiles which has led to explosions and accidents. A case in question is that of Volkswagen being engaged in the pollution scandal. In spite of the damages the company had to pay the consumers still hold the company in good light. This is because the company enjoys a brand name and goodwill which is hard to break and which has developed over many years. Hence the consumers opt for different models rather rather than discounting the company as a whole.