Business Case Study of Apple

1. Background Information

Apple has received criticisms about the unethical practices of its supply chain. The violation of labour rights and environmental pollution are consequences of Apple’s failure in monitoring its outsourced production. The harm in reputation and subsequent loss in profit have therefore urged Apple to take on Corporate Social Responsibilities (CSR) within its supply chain.

1. Key Issues of Apple’s Supply Chain

1. Violation of Labour Rights

Maltreatment towards workers in the supply chain of Apple were under scrutiny by the media and advocacy groups. Specifically, the sweatshop condition of Foxconn, a Chinese manufacturer of iPhone, has been revealed after a spate of worker suicides. In 2011, 18 workers in Foxconn had attempted to, or even killed themselves due to the harsh working condition. Workers has suffered from long working hours, which they could work for 7 days a week. Despite of the overtime hours, worker wages were underpaid and two-thirds of the workers expressed that the compensation do not even satisfy their basic needs. The negligence of health and safety regulations is another concern of the working condition. The excessive amount of aluminum dust in the factories had eventually caused an explosion in 2011, resulting 4 deaths and 18 injuries. The violation of labour rights has shown Apple’s lack of corporate social responsibility towards the protection of workers.

1. Environmental Pollution

Suppliers of Apple were suspected to be breaching the environmental laws. They were bombarded for utilising toxic chemicals and discharging hazardous waste which undermined the health of the communities near by the factories. In 2009, Wintek, a supplier of iPhone’s touchscreen, replaced alcohol with n-Hexane for cleaning touchscreens since it evaporates quicker which could speed up the production. The decision however neglected its poisonous effect and caused nerve damage towards the workers. Despite Apple’s awareness to the situation, it reacted slowly and refused to comment on this case. It was then accused for not taking a proactive stance towards environmental protection standards of its suppliers. Apple was even rather secretive about its suppliers’ environmental policies and it did not publicise its list of suppliers. This causes environmental groups to question Apple for hiding their responsibilities from corporate environmental reporting to keep its low cost of production.

1. Recommendations and Evaluations

1. Monitoring and Enforcing Policies to Protect Labour Rights

To improve the working condition of its supply chain, Apple has first enhanced the inspection towards its supplier factories by increasing the transparency of their practices. Apple has joined the Fair Labour Association (FLA) which would audit their suppliers according to the workplace code of conducts and publish the findings. FLA has then interviewed 35,000 workers at three of Foxconn’s factories and exposed their violation of at least 43 Chinese laws and regulations. The second step made by Apple to eliminate the violation of labour rights was enforcing policy changes in sprawling factories discovered. Foxconn has raised its worker salary by 16 – 25% which became higher than the minimum wage.

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