The image of organizations is formed over the years, and it can collapse at any moment. For such a world-famous company like Apple, any scandal or accusation does not work for the good of the image since the target audience of the brand has high expectations, both from Apple technology and from management actions. Therefore, when such facts as the poisoning of Chinese factory workers because of the means to clean the taps are made public, consumers change their attitude to the brand, and many refuse to use Apple technology, switch to Samsung and other alternatives. However, the opinion of consumers is also influenced by the fact that today devices under this brand are lagging in innovation, unlike competitors. This fact suggests that the technique may not be worth the money that is requested for it. In general, in order to improve its reputation, Apple’s management is essential not only to regularly report on the state of production and the conditions in which employees work but also to introduce new technologies. Otherwise, the company faces a loss of audience, and gradual bankruptcy.
Keywords: Apple, China, management, production, reputation.
Table of Contents
Executive Summary...................................................................................................................2
Table of Contents.......................................................................................................................3
Introduction................................................................................................................................4
Literature Review.......................................................................................................................6
Methodology..............................................................................................................................8
Sales Decrease and Chinese Labour Conditions......................................................................10
Conclusion and Recommendations..........................................................................................12
Introduction
The positive image is the most crucial element of operating different marketing approaches that are used to bring the brand to the top in the market and gain popularity (Thimothy, 2016). A favourable image of the company is also an essential factor for effective management. This is natural because the corporate image has a number of functions. An informative task informs the public about the existence of the company, its products or services, as well as its role in society, and its memorization in the industry.
A commercial function creates a reputation and loyalty to the company from potential customers, which ultimately leads to the fact that the price of the products and services of the organization is logically justified, and consumers are willing to pay the specified price for them. This is how the attitude towards the brand, gradual addiction, and the formation of impressions are built. Protective function defends organizations from potential aggression of competitors, which may be caused by fear for the loss of interest of the target audience to the products of competing firms. Reputation function has a similar feature with the commercial one since it forms the right impression about the company, its products, and services, creates the right reputation and perception of the target market.
Globalization of markets and business practices, as well as the tremendous development of information communications, have led to the situation that information about a company spreads incredibly quickly and becomes public knowledge in a matter of hours. The problem is that not all managers are aware of the need to have a good company image, and therefore do not consider it necessary to invest financial and time resources in the proper advertising of the organization. Additionally, in the perception of the top management of large corporations, any scandal, misunderstanding, or conflict is the PR, and in no way adversely affects the company’s reputation, and does not cause a decrease in sales. This statement is incorrect for the reason that doubtful situations cause certain emotions among overly receptive consumers of the company’s products, which, as a result, can provoke a refusal of services and goods of a particular brand. It happened with Apple.
Apple has repeatedly been accused of mistreating of the employees in China (Merchant, 2017). Employees work 10 hours a day in hazardous production. At the same time, they are not given any protective clothing, and accordingly, they are exposed to harmful effects on production, spoil their health, and as a result, in old age, they may have even more problems and complications. Undoubtedly, many large and medium-sized companies and corporations transfer production to developing countries in order to save money, and also for the reason of the presence of intensive work schedules. In developed countries, the working day cannot last more than 8 hours, and soon, will not be able to exceed 6 hours.
In developing countries, working hours can last 10-14 hours, and this fact is not considered a violation of human rights. If this is perceived as a violation, the law in such countries does not work to protect citizens. At the same time, they also need to work for the welfare of their families, and they have no other alternative than to work in the work for which they will be accepted. The highly developed world is not involved in solving the problem of labour exploitation in developing countries. Moreover, global corporations, whose main offices are located in the USA and the countries of Western Europe, actively use this fact to economize financial means on labour. Thus, this phenomenon implies exploitation, and Apple, as the world leader in the production of technology, was blamed for this.
Since Apple was found to be exploiting the labour force in China, its reputation was noticeably hurt by the outrage of the brand’s target audience. Profits have become an identifier of the problem and an indicator of the correlation between the organization of production of the company and the reaction of consumers. Taking into account the consequences, it is necessary to analyze the ethical and unethical manifestations of Apple’s behaviour, determine whether the corporation influences the opinion and perception of itself by its target audience through known facts about the working conditions of people in China, and also analyze how much this affected consumers and their purchasing patterns.
Literature Review
Ethical behaviour and attitude towards people is a burning issue not only in business. Depending on the cultural characteristics of people, as well as on the hierarchical structure, the ethical framework varies. The situation with irregular work schedules among Chinese workers involves not only the issue of ethics, but also the matters of human rights, the labour code in China, and even xenophobia and racial conflict. Attitudes toward subordinates can also be formed based not only on ethical principles, but also on various kinds of stereotypes and, on gaps in the labour law. In addition, noble actions and behaviour imply making the right decisions. The moral basis consists of considering responsible behaviour and people’s choice of resolutions, rules, and norms, as well as certain ethical standards (Buckner & Carroll, 2007).
Ethical and socially responsible practices can bring financial benefits to business since behaviour associated with maintaining honesty and integrity of a relationship implies taking responsibility for subordinates, and this provides feedback (Turyakira, 2018). Morality and beneficence will are the fundamental principles that must be followed in order to ensure the resilience of their business in the market, create a favourable reputation, and also ensure constant positive attention from investors, sponsors, and ordinary people who become both fans of the brand and ignore him. However, Borade (2012) argued that the code of conduct and the scope of the norm implied a moral sense of what to do and what not to be done. Therefore, non-compliance with the rules and the slightest wrong step can lead to irreparable consequences. Primarily, this factor is topical nowadays, in the age of technology, when any news can spread around the world within a few minutes or hours.
The problem of formation and approval in the business environment of ethics is the subject of study of such sciences as social philosophy, sociology, political science, and also social psychology. The complexity of the process of analyzing the relationship between employees can be viewed through the lens of cultural frameworks, economic characteristics, as well as philosophical questions of morality, business culture, and motivation. As for the issue of motivation, it takes the form of the question of the moral sense of entrepreneurship, which goes to the level of the metaphysics of the economy.
The issue of the relationship between ethics and economics in the intellectual tradition of the West has a long history. Weber pointed to the foundations of the capitalist mentality, and in his teachings focused on productive theories of the formation and development of capitalism, due to the emergence of a new type of person with new values and worldview (Tittenbrun, 2017). Recent theories that reveal the deepest ethical-religious layers of a market-type person include the work of the Catholic theologian Michael Novak “The Spirit of Democratic Capitalism.”
Deontological theories illuminated ethics as a phenomenon that implies duty and duty to obey and includes norms of behaviour, actions, and consequences (Eldo & Gianmarco, 2017). Immanuel Kant (1964) defined the concept of morality as an obligation for people to think correctly and act correctly towards other people. Ian King (2008) argued deontological principles as one that could be compatible with ethical virtues and consequences.
The ethical system of morality is based on the theories that others need to be cared for, and this also includes the ethical dilemma that others cannot do what one does not want. Utilitarianism is a highly influential ethical theory that can be applied to a given case with Apple since it is based on moral choice. The choice is the benefit of a particular decision, as well as of the parties who benefit from the decision. The theory of utilitarianism was defined and developed by Jeremy Bentham and developed by J.S. Mill (1987). The main essence of the theory is in the ultimate good for all people, since this is their constant and sometimes unattainable goal. According to contemporaries, the satisfaction of preferences that lead to the happiness of another person should be the goal of people. Also, people should follow specific rules and regulations not for the sake of the rules themselves, but for the sake of achieving the desired consequences in the best possible way.
The theory of reasoned action implies goodwill, that is, the intention to benefit other people (Floyd et al., 2013). This phenomenon is generated by sincere inner urges to action and aspirations to help and improve the condition of others. In the case of Apple, this theory applies precisely the opposite. The company’s management is not interested in the moral and physical health state of workers in Chinese factories but is only interested in a massive turnover of goods and high profits at low costs. Cognitive recognition of the importance of proper treatment of people is the foundation of beneficence. In the case of Apple’s management, the beneficiary builds confidence in the higher leadership if it does something positive towards the subordinates. In the present case, there is no trust since commitment and virtue are not reflected.
Methodology
Questionnaire: Open and Closed Questions
In order to determine the reaction of consumers of Apple appliances, a method of a written survey was selected, which includes 15 open and 15 closed questions. For the survey, 30 people were selected who have been using Apple equipment for a long time, both phones, tablets, and computers, and are aware of the essence of the brand, its history, and are the target audience of the corporation. Nevertheless, they all are adults, who themselves earn their living, and, accordingly, buy equipment at their own expense. Age limits were defined 24 – 45 years old. The selection of these 30 survey participants is justified, but this choice still has a drawback: due to the loyalty to the brand, the respondents may not be objective, but subjective.
There are only 30 questions in the questionnaires. They all relate to the attitude and perception of users of brand devices about the fact of the conditions in which Chinese factory workers work, whether they empathize with them or whether they are indifferent. Also, there are questions about whether consumers of goods from Apple understand the pricing of the company, how much Chinese workers work for, and what respondents think about the situation as a whole. Considering the Chinese labour in the factories and the price at which certain things are created, one can draw an analogy with the clothing and footwear market, which was described in the 2015 documentary film The True Cost.
Face to face Interviews
Additionally, five extra respondents will be interviewed, which involves personal communication with the organizers of the study. The questions will also concern details of the production of goods under the Apple brand, the production process, and the attitude of the respondents to the working conditions of Chinese workers, the impact of these factors on the health and lives of employees, and the entire system of manufacturing equipment. This approach is used to personally see the emotions of interviewed people, reaction, reflections, and also to fully form a picture of how people react to revelations about the sufferings and problems of other people. The goal is to understand whether they show empathy.
Sales Decrease and Chinese Labour Conditions
News of this nature will undoubtedly have affected the level of the company’s sales, and for this reason, there has been a decrease. Apple held an annual inspection of enterprises in China, engaged in the manufacture of components and assembly of finished products under the brand of the company (Richmond, 2012). It turned out that the number of workers under the age of 16 years increased significantly over the year. Apple, which critics in the US periodically accuse of using child labour, in such cases, insisted that teenage employees had to be sent home to get a secondary education. The company announced that it had ceased its cooperation with the company, which had underage employees, and also described the way it had reacted to suicides at the factories and the poisoning of Chinese workers with N-hexane.
In the factories, workers processed more than half the time established by labour legislation. Wintek employees were poisoned with iPhone and iPad screen cleaner (Barboza, 2011). Apple insisted on stopping the use of this type of chemicals. With three contractors, contracts were terminated due to violations in the working conditions of the workers. According to the reports, last year was for the Californian Company a record number of inspections. The company claims that as a result of such checks, over $ 3 billion has been paid to workers in the form of initially unpaid remuneration for processing. At the same time, Apple is the only company among the major manufacturers of high-tech products that publish the results of such inspections. Also, the report states that immigrants who are forced to work away from their home countries are often charged exorbitant fees that drive them into debt. Apple claims to work on a solution to this problem. In addition, one case was revealed when the director of one of the plants offered a bribe to invited Apple auditors and asked them to make changes to the inspection reports. Apple also ceased cooperation with this company.
Apple’s management noted that all the affected workers received the necessary treatment, and the factory will continuously report on their condition until complete recovery. In addition, the Chinese company paid for their treatment, food, as well as all necessary medical services aimed at returning employees to their health state. It is reported that most of the workers returned to the same factory. However, later, in 2016, the information regarding inappropriate working conditions appeared in the media. Then, in spring, Bloomberg journalists organized an excursion to the Pegatron factory, where 50,000 people collect the latest Apple products. The production staff of the publication demonstrated an improved automated system of control over working conditions, which is designed to refute allegations of inhuman working conditions in Apple’s factories.
Before entering the territory of the assembly shop, each employee is thoroughly monitored with scanners, and the time of arrival for a shift is noted in the pass. The factory had a weekly limit of 60 hours, exceeding which, the employee will not be able to return to the workplace. This rule was followed by checking for devices with cameras that can be used to leak photos of unpublished new products.
In 2018, Apple has released financial results for the past quarter. Revenues increased by 20% compared with the same period a year earlier and amounted to 62.9 billion dollars (“Apple reports fourth quarter results,” 2018). Net profit went - 14.12 billion dollars. Net income per share was $ 2.91, showing an increase of 41%. The fall in smartphone sales was offset by the success of the company’s services, including Apple Pay, iCloud and the App store, which showed an 18% increase. Timothy Cook noted that sales of Apple Watch watches and AirPods and Beats headphones increased. Despite the drop in the number of iPhones sold, revenues from them grew by 1% due to sales of the more expensive iPhone 7 Plus. At the same time, iPhone sales brought in $ 7 billion less than the same period two years ago. China was partly to blame for such a decrease: revenues from smartphone sales in this country fell by 14%.
Conclusion and Recommendations
The transfer of production to China is an economically justified action. However, the management of Apple does not reconsider the working conditions of Chinese workers, which has led to massive poisoning in the factories for the production of parts for Apple equipment. Moreover, the company was accused of the use of child labour, as well as irregular working hours and extensive processing. This phenomenon has led to the situation that a particular part of users of the Apple brand equipment have stopped using it, and also began to switch to devices from Apple’s competitors.
Since it has been determined that Apple is exploiting the workforce in China, its reputation has noticeably suffered from the outrage of the brand’s target audience. Surveys and interviews, compiled for regular users of the company’s technology, can determine whether there is a relationship between the fall in sales and the release of information about the working conditions of Chinese workers. The interviewing method is an appropriate one for the reason that it is possible to count emotions from the face of a person who answers questions. Personal interaction will help to understand exactly how the respondent feels when he or she is asked questions about the slave work schedule in Chinese factories, which emotions one is experiencing, as well as what, according to respondents, needs to be changed with this work system. Profit has become a problem identifier and a correlation indicator between the organization of the company’s production and consumer response. After analyzing the ethical and unethical manifestations of the behaviour of Apple, it can be argued that the opinion of the target audience Apple can dramatically affect the system of work in the company.
To change the situation, Apple management must apply several approaches that will help restore the brand’s reputation and attract a new audience. Since the main scandal was associated with the production, the company needs to change the schedule of its employees to avoid overwork. Then, one must start conducting demonstration tours of the production for journalists and bloggers from around the world. Thus, in the world, there is an increase in awareness of how the equipment of this brand is made, and also that workers do not overload and are not in danger of their health.
The second step implies posting a large number of photos and videos from China, made on the production of pages on social networks. This approach will also be a statement of the fact that Chinese employees of enterprises work in safe conditions, have no overwork, and children are not involved into production. The third step is to start regularly publishing reports on the state of mental and physical health of factory workers in China. Further, it is necessary to improve the pricing policy of the company for new devices in 2018. It is no secret that the drop in sales is due not only to the release of information about Chinese manufacturing but also to the fact that Apple has put too high prices on new phones, as well as no drop in prices on phones of 2017.
Finally, Apple must begin to produce new quality products and provide innovative services. A well-known fact is that many consumers are dissatisfied with the fact that after the death of Steve Jobs, the company does not produce any innovative products. Products are secondary, and their quality is deteriorating. The essential thing that Apple should do is to analyze in detail the shortcomings of their equipment, and also to do everything possible to eliminate them. Thus, the company will be able to regain the trust and loyalty of its target audience.
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