Corporate Responsibility and Marketing Strategy A Case for Apple

CorporateResponsibility and Marketing Strategy: A Case for Apple Incorporation

CorporateResponsibility and Marketing Strategy: A Case for Apple Incorporation

Firmsare forced by law to observe some aspects of social corporateresponsibility and ethical practices. However, organizations have aprimary duty of ensuring that they take up the responsibility of theeffect of their activities on the society and conduct ethicalpractices in a voluntary manner. The Government of Canada (2014)defined corporate social responsibility as activities that arevoluntarily undertaken by the firm with the objective of ensuringthat it operates in a socially, environmentally, and economicallysustainable manner. Although some of the social responsibilities aremandated by the regulations, individual organizations that practicethem are the primary beneficiaries because they enhance the sharevalue of the organization. This implies that all aspects of corporatesocial responsibility and ethical practices are meant for the benefitof individual firms as well as the society. This paper will addresssocial responsibilities and ethical practices undertaken by the AppleIncorporation and their effects on the firm.

Background

AppleIncorporation is a multinational company based in the United States.Its main activities include the design, manufacturing, and marketingof personal computers, mobile devices, computer software, andconsumer electronics (Apple Incorporation, 2014). Some of the keyproducts designed and manufactured by Apple Incorporation includeiPad, iphone, iOS operating system, Apple TV, and iCloud amongothers. Apple Incorporation was started in 1976 and it has beenexpanding through acquisition and product diversification. Thecompany has been ranked as the second largest IT Company by revenue,the most admired firm in the United States, and the third worldmanufacturer of mobile phones after Samsung and Nokia (Fisher, 2008).Although the company has received praises from its customers, it hasbeen criticized for its contractor labor, business, and environmentalpractices.

Currentposition of ethical and social responsibility

AppleIncorporation is one of the companies in the information technologyindustry that have strong corporate responsibility policies.Currently, Apple Incorporation is focusing on three key factors(including human and labor rights, environmental, and compliancestandards) that are clearly indicated in its corporate socialresponsibility policy. Apples labor right strategy has two elementsthat ensure that the rights of employees working directly for Appleand its suppliers are protected. The first element of labor rightsprevents the abuse of human rights by prohibiting discrimination atplaces of work, child labor, involuntary labor, unfair remuneration,and freedom of association (Dijk, 2007). Secondly, the CSR policyrequires the Apple suppliers to maintain industrial hygiene and putin place protective measures that will ensure that all employees arehealthy and safe. Environmental policies require suppliers to adhereto Apples regulations on the management of hazardous substances andtreat wastewater as well as solid waste as per the applicable laws.In addition, Apple Incorporation has a compliance section formulatedwith the objective of ensuring that its ethical and socialresponsibilities are followed by suppliers. This is accomplished bytaking direct responsibility to maintain safe working conditions infactories owned by suppliers (Dijk, 2007).

AlthoughApple Incorporation has a well designed CSR policy, there are twocases showing that the company has failed to comply with its ownethical and social responsibility strategies. First, research showsthat there is rampant discrimination against employees in the ThaiHDD Supply chain, which is composed of the major companies thatsupply Apple with hard discs. According to Dijk (2007) LTEC (one ofthe Thai companies that supply Apple with hard discs) discriminatedagainst employees with hepatitis by giving them year-to-yearemployment contracts compared to their healthy counterparts who areemployed on a permanent basis. This is contrary to Apple’s CSRpolicy that requires suppliers to treat all employees equally.Secondly, most of the Apple products (including the iPhone hardware)are manufactured using non-recyclable material and some of thesematerials are toxic. According to Green Space (2014) the PVC andbrominated flame retardation (BFR) that are included in Apple devicesare toxic. This indicates that the company has failed to maintain asafe environment has stated in its CSR policy.

Theimpact of publishing ethics and social responsibilities violations

Thepublication of ethics and social responsibility by the AppleIncorporation had negative impacts on the performance as well as thereputation of the company, especially in the Asian market segment.This is because most of the violations are conducted by suppliersbased in the Asian countries. For example, the articles “Sweatshopconditions at IPod Factory reported” published in Post Businessdescribed the harsh working conditions that employees were subjectedto at Inventec and Foxconn (Musgrove, 2006). The article revealed tothe public that employees in the two factories were forced to liveand work in the factory buildings. On average, each employee earnedabout $ 100 per month from which they were expected to pay rent andfood provided by the company (Musgrove, 2006). In addition, themanufacturers based in China polluted the environment and promotedchild labor.

Thepublication of these environmental and labor malpractices affectedthe reputation of the Apple incorporation negatively. The company wasforced to close some of its branches (including the Suzhou plant)following the increase in residents’ complaints about environmentalpollution caused by the Apple Incorporation and its suppliers(Wilson, 2011). Moreover, these malpractices reduced the reputationof the Apple Incorporation in the face of other stakeholder,including the Chinese government that ordered the closure of theSuzhou plant. Although the publication of the labor and environmentalviolations have significantly affected the reputation of the AppleIncorporation, there is no clear evidence as to whether this affectedthe financial performance of the company following the closure ofsome of its plants. This implies that a reduction in the reputationmay not have affected customers’ loyalty on the company products.

Suitablemethods to ensure that suppliers adhere to wage and benefitsstandards

AppleIncorporation has many options to ensure that its suppliers adhere towages and benefits standards, but two of them are more effective.First, Apple Incorporation should develop supplier verificationpolicy that will ensure that all suppliers are regularly screened.Tenders for suppliers who fail to adhere to pre-determined wages andbenefits standards should be terminated in order to secure thereputation of the incorporation. According to U.S. Food and DrugAdministration (2014) supplier verification rules goes beyond theevaluation of the quality of the products supplied, but also thecredibility of the source. This implies that Apple Incorporationshould stop over-emphasize on quality of supplies, and include theworking conditions and compensation of employees working for itssuppliers.

Secondly,Apple Incorporation should focus on the stakeholders’ involvementin order to ensure that suppliers comply with its standards.Currently, the Apple does not publish any information regarding theinvolvement of the stakeholders in matters pertaining to corporate aswell as social responsibility (Dijk, 2007). Some of the Applesuppliers who should be involved in matters of employee compensationand labor practices include the government, non-governmentalorganizations, suppliers’ employees, and labor unions. By involvingall the relevant stakeholders, the company will ensure that all thegray areas (such unfair compensation and poor working conditions) arecleared through agreements.

Thereaction of Apple customers to an increase in product prices

Apple’sdecision to increase the price of its products with the objective ofhelping its suppliers in complying with the compensation standardsmay not affect its sales volume. This implies that Apple customerswould be willing to buy its expensive products instead of shifting toproducts produced by its competitors. This is based on the notionthat Apple Incorporation is one of the technology companies thatenjoy a high rate of customer loyalty. Kelly (2014) identified that59 % of the Apple customers have blind loyalty to its products, 78 %of the customers’ states that they cannot imagine buying from adifferent manufacturer, and 52 % of them stated that they are justimpressed with Apple products. This implies that Apple customers aremainly driven by the impression of the products and blind loyalty tobuy the products. Therefore, it would be their pressure if Appleextends its hand to support its suppliers, which means that theywould be willing to pay more to get the Apple products.

Applemarketing strategy

Unlikemost of the players in the technology industry, Apple incorporatedoes not compete with other firms. Instead, Apple focuses onuniqueness to ensure that its products have no comparison in themarket. For example, Apple has managed to justify its high prices byshowing that its products are beautiful and have features that cannotbe matched (Stewart &ampHenderson, 2014). Consequently, Apple hasmanaged to attain a market share that is loyal to its productsbecause of the uniqueness. Study shows that Apple does not advertiseany of its products, but most of its adverts are done by networkoperators and distributors who wish to increase their sales volume(McCormack, 2013).

Thereare two strategies that Apple can use to enhance its market strategy.First, Apple should start focusing on email marketing, which has beenshown to be the most effective marketing strategy (scoring 83 %) inthe contemporary market environment (Wessley, 2012). Secondly, Appleshould start designing its own web contents (including SEOs), insteadof relying on network operators. This will ensure that the webcontents demonstrate the strengths of Apple products. The use of webcontent scores 71 % in the ability to depict the product features andreach the target customers.

Conclusion

AppleIncorporation is one of the companies that enjoy customer loyalty inthe technology industry, despite the fact that it has received somecriticisms because of environmental and labor malpractices. AlthoughApple has a CRS policy, it is evident that it has failed to thepolicy provisions in the past, which has affected the companyreputations. However, the strong customer loyalty, quality products,and a focus on special features have maintained the competitivenessof the company in the technology industry. However, the currentlevel of competitiveness can be enhanced by using email marketing andweb contents, such SEOs.

References

AppleIncorporation (2014). Apple Incorporation. GoogleFinance.Retrieved July 13, 2014, from http://www.google.com/finance?cid=22144

Dijk,M. (2007). Apple:CRC company profile.Amsterdam: SOMO.

Fisher,A. (2008). Americans most admired companies. Fortune,157 (5), 65-67.

GreenSpace (2014). Tastynews from Apple.Amsterdam: Green Space.

Kelly,G. (2014). The majority of iPhone users admit to blind loyalty: Whythis is a problem for Apple. Forbes.Retrieved July 13, 2014, fromhttp://www.forbes.com/sites/gordonkelly/2014/03/21/the-majority-of-iphone-users-admit-to-blind-loyalty-why-this-a-problem-for-apple/

McCormack,F. (2013). Apple’s iPhone marketing strategy exposed. YahooFinance.Retrieved October 27, 2013, fromhttps://smallbusiness.yahoo.com/advisor/apple-iphone-marketing-strategy-exposed-032350605.htm

Musgrove,M. (2006). Sweat shop conditions at IPad factory report. WashingtonPost.Retrieved July 13, 2014, fromhttp://www.washingtonpost.com/wp-dyn/content/article/2006/06/15/AR2006061501898.html

Stewart,M. &ampHenderson, K. (2014). 7key strategies that you must learn from Apple’s marketing.San Francisco: Kissmetric.

TheGovernment of Canada (2014). Corporatesocial responsibility.Ontario: Foreign affairs, trade and development Canada.

U.S.Food and Drug Administration (2014). FSMAproposed rule for foreign supplier verification programs forimporters of food for human and animals.Silver Springs, MD: U.S. Food and Drug Administration.

Wilson,D. (2011). Chinaorders Apple supplier plant closure over environment concerns.London: Incisive Financial Publishing Limited.

Wessley,T. (2012, August 20). Top10 most effective marketing strategies.Appleton, WI: Weidert Group.