Apple Supplier Problems
Assignment Number
Andri Smith
Strayer University

BUS 508
Professor Hase October 21,2014

Apple Supplier Problems
Apple corp. is the business to make a profit, they buy products and services that meet their specifications from the lowest bidder. With the globalization of the business world, ease of doing transactions overseas, companies now does business in foreign lands. In these foreign lands they don’t have the same labor laws that are in the United States. What Apple is doing along with most companies is buying products and services from these countries. Apple has taken some criticism for doing business with some of these countries. I am going to talk about Apples position on ethical and social responsibility Apple supplier (2014).
Question #1
Apples current position is fair and ethical treatment to employees by ending excessive work hours and limiting workweeks to a 60 maximum. Empowering workers by giving training on safety, rights. Providing free classes on language, computers skills and other subjects. Apple also has polices on underage workers, they don’t except it. If there is an underage employee under Apples policy they will be returned to the school of the families chose and paid the wage of the employee while in school by the supplier. While the employee is in school Apple follows up on the employee to ensure they remain and finishes school. The company has an equal opportunity hiring policy, ensuring the suppliers do not discriminate against future employees. Their suppliers are also required to provide a safe and healthy work environment. Suppliers are required to have minimal impact and help with the local environment. If violations to polices are found Apple with works with the supplier to fix the discrepancies.
Apple can have all these policies, but if the company doing the work doesn’t comply with them it doesn’t really matter. Some of the countries cultures allow these practices that Apple frowns upon. I don’t think Apple is complying with their policies, since the beginning of the year there has been numerous violations to their policies. Lowensohn.J (Aug 15,2014) “A new report from the Fair Labor Association (FLA) on two facilities run by of one of Apple's manufacturing partners has found numerous violations, including excessive overtime, underpayment of sick wages, and inadequate health and safety measures. Those issues have been flagged at other factories in Apple's supply chain over the years, including Foxconn, which was not the focus of this report.” Apple can only do so much these companies are going make a profit and if its right in their culture it’s going to happen. The only way for the companies to change there the way they are doing business is to pay them more so they pass it on to the employees. The companies are complying with polices, because they do now have unions but the employees were not aware. They also found that that there safety is issues with the air quality and improper storage of flammable and toxic substances in Shanghai. Apple made a statement that they are working with the companies Lowensohn, J. (Aug15, 2014)
“Our suppliers must live up to the toughest standards in the industry if they want to keep doing business with Apple, which is the first and only technology company to be admitted to the Fair Labor Association. We are committed to providing safe and fair working conditions for everyone in our supply chain.
Last year we conducted 451 comprehensive, in-person audits deep into our supply chain so we could uncover problems and work with our suppliers to fix them. We track and report the weekly working hours for more than 1 million workers, and our 18-month Apple Supplier EHS Academy training program is raising the bar for environment, health and safety management in the industry.

The Quanta facilities inspected by the FLA last year were included in our 2014 Supplier Responsibility report, which we released in February. Our own experts have audited these sites 16 times, most recently last month.
In the year since the FLA's visit, we have worked closely with Quanta to drive meaningful improvements in areas identified by both the FLA and Apple. Apple conducted four follow-up inspections on top of the annual audits of both facilities, to ensure the needed corrections are in place.
This year, through the end of July, Quanta has averaged 86 percent compliance with our 60-hour workweek. Excessive overtime is not in anyone's best interest, and we will continue to work closely with Quanta and our other suppliers to prevent it.” How much is enough without taking complete control of the company. There is another company that makes the aluminum case for most of the apple products that’s under fire for not following polices that Apple has set. Catcher Technology factory Velazco, C (September 5, 2014) had workers putting in crazy overtime and using toxic chemicals without being properly trained. The problem with this case is it was found over a year ago and has gotten worst. Apple came out and said they planned to follow up the next to reaffirm they comply with polices Apple has set. Another case where Apple suppliers are violating policy is in Malaysia where the iphone camera is made. The company-recruited workers from Nepal after production the factory shut down and abandoned workers for more than a more until the government returned them home. They also found where workers are paying excessive fees to recruiters for jobs, then forced to work to pay off there debt and that’s also a violation of Apples policies Culpan, T & Satariano, A (Feb13, 2014). I think it is impossible for Apple to control its suppliers in other countries. There are so many cultural differences it’s impossible, everyone doesn’t do it like the United States. When the inspectors are coming, just like in the states they get a notice so they can get their company together. There have been numerous accidents in overseas factories where workers are injured or killed and business is still done. Apple is not is keeping up to it polices Question #2 It hasn’t affected Apple at all, sales are still high and iPhone’s are selling out even being priced higher. Apples profit is still there and hasn’t declined since the violations were reported. The Apple customer wants a reliable high end product and Apple supplies that with all their products. Yes, Apple suppliers violate there polices, the customers still buy their product with a price increase and higher then their competition. Yes, Apple reputation was hurt and they bounced right back without a lost at the end of the year
Question #3 The only way I see Apple enforcing there polices overseas in their suppliers company is have a representative in each of the company’s sites. Having a representative in each site makes it easy to ensure they are complying and if not identify and help fix the problem. The representative can hold training with the managers and ensure they pass it on to the staff. The representative can also work with the quality assurance at the site to help fix any problems, stop recurring problems and keep Apple informed about anything that might work with any other suppliers. Having a local representative can also help with community in the area if Apple wants to give back to that community they know what is needed or wanted. If Apple goes the route of the site representative, they have to supply that person and train them. Sending an employee to another country is expensive and it affects the bottom line. Apple could also have undercover employees. These employees could start right from the beginning, get hired; trained and just become regular employees that report back to Apple. This could work if nobody found out that that person was working with Apple and if found out what would happed to the employee. If the employee were found out, Apple would have to help with the job search and ensure that there’s no retaliation to the worker. Some companies are now doing their own inspections. Inspectors are finding theses companies are sub contracting out the products Clliford C. and Greenhouse S. (September 1, 2013). There are companies that are now monitoring the companies they are having making their product because of the publicity of work conditions, labor laws and deaths in factories. Major U.S. companies are now placing there own employees to monitor companies policies, now companies are having a zero tolerance policy to the ethical policies and will drop a supplier. I like that the companies are being more proactive with the their polices in their overseas market. Companies like Apple need to get more on the ball, be more proactive with enforcing the polices that they make and if violated find a new supplier. Question #4 Apple customers haven’t stopped buying since with the violations with the overseas companies been uncovered. Their customer expects a high quality product with good service and Apple already has supplied this to their customer, yes the Apple customer would pay a little more to receive the product they already have and expect with the Apple line. They Apple company has been going strong for years now and they have created customer loyalty from the majority of their customers Apple Inc. Investor Relations (2014) Question #5
Apple could gain some competitive advantage by offering a loyalty program. Apple customers usually have more them one of their products in their household. These customers should be able receive products before release to avoid long lines and to test them for the company, since they are loyal they know what they like and to expect. Knowing that your loyal customer is happy, they can focus on acquiring the newer generations and new customers. Supporting the local community goes along way with customers. Have each store support a local school and community youth league; you’re exposing the product to younger customers or future customers. The children have allot of influence on what the parents buy, some parents don’t know how to use computers or don’t know the different features that are unique to brands exposing your product to the future buyers by supporting them will go along way when its time to buy.
Apple has a lot of work to do, out sourcing to other countries helps make the product affordable and makes max profits for the stockholders. I like that the company makes jobs in under developed countries, yes they pay lower then U.S. wages and higher then local. If they paid the employees the same wages here why take it overseas. There would be no reason to employee overseas companies and help support their economy, eventually it will grow and wages will rise. It’s hard to make other companies comply with U.S. standards without paying U.S. wages, stop employing children and pay a fair wage for their economy.

References

Apple Inc. (2014, Oct) Apple.com : Investor Relations. http://investor.apple.com/results.cfm
Apple Inc. (2014, Oct) Apple.com: Supplier Responsibility Accountability. https://www.apple.com/supplier-responsibility/accountability/
Clifford, S. and Greenhouse, S. (2013, Sept 1) NY Times.com: Fast and Flawed Inspections of
Factories. http://www.nytimes.com/2013/09/02/business/global/superficial-visits-and-trickery-undermine-foreign-factory-inspections.html?pagewanted=all&_r=0
Lowensohn, J (2014, Aug 15) The Verge: Latest Audit on two Chinese Apple supplies finds labor, health violations. http://www.theverge.com/2014/8/15/6006451/new-audit-on-two-chinese-apple-suppliers-finds-labor-health-violations
Satariano, A and Culpan, C (2014, Feb 13) Bloomberg.com : Apple Tallies Labor-rights
Violations in Supplier Audit. http://www.bloomberg.com/news/2014-02-13/apple-tallies-labor-rights-violations-in-supplier-audit.html
Velazco, C (2014, Sept 5) Engadget: Apple supplier tagged with another round of labor
Violations. http://www.engadget.com/2014/09/05/apple-catcher-supplier-labor-violation/