Corporate Social Responsibility – The Case of Apple and Foxconn Technologies Essay Example

the company. A stakeholder may include customers, employees, suppliers, etc. The stakeholder's approach addresses corporate social responsibility as a significant element that recognizes the responsibilities of a business to the society.

According to stakeholders approach, people tend to like companies that are active in community development programs that mostly help the less privileged in the society. This participation by companies on corporate social responsibility give the company a good public relation and encourage client loyalty and finally more profit. Even though Friedman’s approach is seen to have no value on those who are not shareholders, he may have overlooked those factors that contribute to making a company profitable in the long term. Some of these factors include: happy employees are good workers because they are dedicated and enjoy working for you. Besides, a good public relationship makes the brand strong and encourages loyalty to the business. The shareholder's approach can be related to one of the latest company scandals that relate to the largest manufacturers and suppliers of Apple products. This company is known as Foxconn Technology Group, which operates in Asia, Europe, and the Americas.

Foxconn Technology is ranked world largest contracting electronics manufacturer, handling more than a half of all global electronics in both manufacturing and servicing. On the other hand, Apple has experienced tremendous growth over the years out of selling most sourced for Ipads and iPhones all over the world. Regardless of their growth and success in the global business arena, the question of ethical performance concerning stakeholders is rated negatively. Since the beginning of 2010, Foxconn Technology has been in the global media limelight over the rapid and increasing number of suicide

incidences by the factory workers. These incidences at Foxconn were attributed to poor working conditions where the factory workers stated that they were being mistreated and overworked more than machines. The workers further complained that they worked very long hours on a regular basis and also they were forced by their harsh supervisors to work on overtimes and in all weekends with very minimal salaries and a threat of being fired if they rebel.

The workers pointed out that they receive substandard medical attention and health care benefits in the factory premises. Furthermore, Foxconn employee reported that problems and accidents encountered in the factory premises were never publicized. For example fire and gas explosions due to ignorance by the company to adhere to the occupational safety procedures and regulations were never reported. The workers' dormitories were said to be fully equipped, but the workers did not have time to enjoy them because of the very long working hours and work-related stress. As much as the workers were suffering and undergoing this hardship the two companies Apple and Foxconn did not seem to be concerned with the heartbreaking scenarios. To keep up with the demands of Apple products the two companies kept increasing their productions rate while on the other side, Apple pretended to be concerned about what was happening in its outsourcing supply international company by releasing a suppliers responsibility report to maintain its customers' confidence and loyalty in Apple products.

With the scandal still raising ethical issues, Apple and Foxconn still work together, and Foxconn is still listed as Apples manufacturer and supplier, as Apple keep releasing new products. The decision of Apple to maintain its

business relationship with Foxconn presents a question of whether Apple should be held responsible for the harsh working conditions of factory workers at Foxconn. Apple's decision to maintain working with Foxconn is compared to Milton Friedman’s shareholder approach where their main focus is making the profit and do not care about the social welfare of the factory workers that are mistreated at Foxconn. By using the Friedman’s shareholder approach, Apple decision is seen as profit oriented. Factory workers in Foxconn are paid very little compared with the high prices of Apple products if Apple stops outsourcing and start to manufacture their products in the USA they will be forced to pay their workers high salaries which will reduce their profit margins and make losses.

The shareholder's approach is a smart move according to Apple but at the cost of maltreatment of factory workers in China who are making their Apple products. Just like the shareholder's approach, Apple decision is seen as selfish, illegal and unfair to the factory workers at Foxconn. Foxconn doesn’t comply with Apples suppliers’ code of conduct and the Chinese labor laws; workers are still subjected to long working hours with threats of being fired if they refuse. In essences, Apple decision is also not fair and right since those who are involved in making the Apple products are mistreated and pain very low while Apple Company is making massive profits. Apple is also encouraging this mistreatment of Foxconn factory workers by still providing more orders to be produced by Foxconn, who in turn will maintain their harsh production methods and the suicide levels will keep increasing due to work related stress.

The recently

released evidence about the business relationship between Apple and Foxconn bring a sign of hope to the poor factory workers. In response to negative media, reaction coupled with the negative global reputation. Foxconn agreed to comply with China’s legal limit by reducing the weekly working hours to 40 hours per week and on the other hand a maximum of 36 hours overtime per month. Apple has also hired an independent firm to do audits and present a regular progress report on the conducts and changes Foxconn is doing to correct its wrongdoings. These actions taken by Apple on embracing the stakeholders approach also convinced Foxconn to reconsider their business approach in fear of losing customers who were condemning the unethical misconduct by Foxconn. Initially, most customers indicated their disappointment with Apple decision to continue business with Foxconn and ignoring the ethically wrong state of affairs in Foxconn for the sake of profit which is considered an inhuman treatment to workers.

Apple's bad reputation on environmental issues and monitoring its supply chain raised a lot of questions on how Apple conducts its corporate social responsibility practices. The current Apple CEO Tim Cook has tried to address the issues by advancing the efforts of played by Apple in corporate social responsibility. Apple adopted the stakeholder's approach, which focuses on employees, customers and other stakeholders rather than just making profits. This approach though closely monitored by auditors and the media, it is providing better work conditions by the factory workers in Foxconn, it has also created more employment opportunities to fill the remaining hours and maintain productivity. Stakeholders approach on the other hand has boosted the brand reputation of

both Apple and Foxconn, and this will also increase productivity. Tim Cook’s stakeholders approach has also increased transparency in the supply process by introducing employee welfare donation programs and other charitable contributions. The efforts by Cook to transform Apple into a multinational socially responsible corporation have seen Apple participate in some philanthropic activities and production of environmentally friendly products which was not there before.

The move by Apple and Foxconn to choose the stakeholder's approach and try to mend their wrongdoings demonstrates the need for multinational companies seeking ways to contribute to the well-being of the society while also maintaining profitability. Despite the shareholder's approach being used historically for a long time in most companies, there is a gradual and yet profound change in the world of business where the stakeholder's approach is now a common trend. The customers, employees, communities, financiers, government bodies and trade unions are now part of the companies, and their opinions also count in the decision-making process. A focus on stakeholders approach has lesser risks compared with shareholders approach. For instance: Enron and WorldCom collapse because of the continuous pressure on the manager to raise returns to shareholders. These scenarios make corporate social responsibility a must for any company that aims a good public relation, reduced operation cost and customer loyalty.

References

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