Corporate social responsibility (CSR) is fast developing as an issue of utmost importance in business. The repercussions for the companies that embrace it as part of its strategy and policies have had nothing but good reports about the practice. However, the neglect of CSR has been extremely detrimental. Nike and KFC have experienced massive loses and negative reflection on their brand images simply for the neglect of the effects of their activities to the society and the environment. This has brought the attention of many organizations on the importance of CSR. The global demands for transparency and responsible businesses have virtually formed conformity with CSR. Companies are now admonished to not only focus on being a means of wealth creation for their shareholders but be good global citizens whose impact on the stakeholders as a whole is beneficial if they are to enjoy continued success 1 . The purpose of this paper is to gauge Apple’s social performance. This shall entail performing a macro-environment analysis, reviewing the company’s governance and social responsibility and how its stakeholders can influence its performance.
Apple’s Company Profile
The world has gotten infinitely better from the times when the term apple was synonymous with a fruit. Currently, the mention of the word is associated with the mammoth technological global corporation that has a financial position that rivals most developing countries. Apple Inc was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne who later left the company. The company whose headquarters are in Cupertino, Los Angeles, California is the largest IT Company globally in terms of revenue and the second largest mobile phone manufacturer after Samsung 2 . The massive success that the company has enjoyed and its continuity are attributed primarily to the fact that the company has for the better part of two decades been a leader in innovation. The fact that the company is also exceptional at target marketing and enjoys a massive consumer loyalty, has further strengthened its position. Finally, brand equity has been integral to its competitive edge.
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Apple is a designer, developer and seller of consumer electronics, computer software and also offers online services. The company’s list of hardware products include but are not limited to the iPhone smartphone which is the company’s largest revenue generator, the iPad tablet, its wide array of Mac computers, the iPod which is the company’s portable music player, the Apple smartwatch which can be paired wireless with its portable devices, the Apple Digital TV, and the Homepod speaker system. The extensive software on offer by the company include its two operating systems namely the macOS and iOS, the Safari web browser, the iTunes media player for its media devices, the iWork and iLite suites for creativity, Xcode, Final Cut Pro, and Logic Pro. The online services that the company offers include its prominent iTunes Store, iCloud computing platform, the Mac App Store and IOS app store which provide exclusive content and applications for its Mac computers and iPhone and iPad respectively. It also has the Apple Music Store for the purchase and download of music on to its devices.
The company was founded to sell the Apple personal computer that was designed and hand-built by Wozniak. The computer that was priced at $666.66 in July 1976 would have been worth $2,867 in 2017 after inflation adjustments. This is a clear emphasis on the fact that the pricing strategy of the company has also been on the high end and this steadfastness has been one of the company’s core policies. The company was incorporate in 1977 after the departure of Wayne who sold his share of the company back to Jobs and Wozniak for a measly $800. This is considered among one of the most unsound business judgments of all time only perhaps rivaled by the move to purchase two pizzas for 10000 bitcoins back in 2010. In the same year, the company’s sales grew exponentially by 533% annually 3 . The company has subsequently grown so much that with diverse interests in a number of fields. Some of the company’s subsidiaries include Shazam, FileMaker Inc., Beats Electronics, Apple Worldwide Video, Texture, Apple Sales International, Braeburn Capital and Anobit. The company underwent some structural changes following the passing of its CEO and founder Steve Jobs but has continued to enjoy strong financial performance.
An Analysis of Apple’s External Business Environment
Much like everything in life, businesses exist in environment and they are subject to the influence of the environments in their operations. An organization’s business environment consists of its internal environment and the external environment. This paper shall however focus on the external business environment as we seek to establish some of the external factors that have the potential to influence the operation of Apple Inc. typically, the analysis of an organization’s internal business environment entails conducting a SWOT analysis for the sole purpose of evaluating a company’s strengths, weaknesses, opportunities and ultimately the potential threats that it faces. The external business environment of an organization on the other hand can be analyzed using a number of tools. These include but are not limited to a PESTEL analysis and Porter’s Five Forces Framework. For this paper a PESTEL analysis was conducted to ascertain the political, economic, social, technological, environmental and legal factors that influence Apple.
Basic Characteristics of Apple’s Microenvironment
As a global leader in digital asset management, Apple is also considered a major player in the Smartphone industry. Much of the competitive edge that the brand enjoys is because it is both a hardware and software manufacturer. This coupled by significantly low supplier bargaining power has given the company a massive competitive edge. The fact that the company offers its users segmented sharing and the said content is only compatible with its software and devices with purchases that can only be made through Apple’s online platforms have helped minimize the potential influence of external factor on the company 4 .
The fact that the company is a global corporation with operations in several markets across the vast expanse of the world means that it has to abide with a number of legal and regulatory demands of the several areas of its operation. However, as per the company’s financial performance, these and other factors have done little to slow the rise of Apple into a mammoth corporation. It enjoys excellent brand awareness over its closest rivals Samsung, Lenovo, HP and DELL 5 yet much like all entities in an environment it is subject to external influence politically, economically, socially, technologically, ecologically and legally as well 6 . For the purpose of this paper which focuses primarily on the company’s social performance, we shall review the social factors influencing its performance only.
Social factors
With the company’s competitive advantage in the industry being derived primary from the quality and the design of its products the company’s product have for over three decades maintained a high level of appeal to its consumers. However, the company’s exquisite designs and unmatched quality come at a dear price; the company’s product portfolio comes with exuberantly high price tags that make their affordability out of the reach of most of the inhabitant of the planet. The primary target market for Apple is high-end users and it enjoys unprecedented customer loyalty with them that have helped it amass massive revenues, they have difficulty penetrating low income and developing markets 7 . Secondly, the increasing need to integrate technology in virtually all aspects of human life provides a massive opportunity for the global leader in innovation. The growing trend for Smartphone due to their portability and the early exploitation of the company of this trend has helped establish the company’s financial position owing to the high returns of early entry into the industry as compared to its IT counterparts 8 . This anticipation of customer preference is the same reason why the company enjoys massive revenue from its digital download platforms as the society moves from analog media to digital media. This explains the massive success of its iTunes music store.
Ways by which the primary stakeholders can influence the company’s performance.
According to Stanford’s 1983 internal memorandum where the term stakeholder first appeared, a stakeholder is a member of the groups whose support and input are mandatory if an organization is to enjoy a sustained lifeline 9 . Since then the theory was refined and heavily championed by R. Edward Freeman. As per his view, a stakeholder has the capability to affect an organization or to be affected by it. Stakeholders possess what is regarded as stakeholder power and they can use it to influence an organization. Stakeholder power denotes the ability to utilize assets for the purpose of initiating an occasion or attaining a specific outcome. Stakeholders generally possess five types of force. These are monetary force, enlightening force, legitimate force, voting force and political force. The financial force resides in the hands of the retailers, suppliers and the clients 10 . The economic power is held by the consumers, suppliers and the retailers.
Suppliers can exercise their economic power by refusing to fill the organization’s orders or make supplies in the event that there is a breach of the contractual terms. Consumers can boycott the company’s products which can adversely impact its sales volumes and lead to massive loses of revenues. It is important to maintain great customer relations and loyalty if an organization is to enjoy sustained profitability. The employees can strike or execute a go slow in protest for unfavorable treatment by the organization which will negatively impact the company’s productivity and ultimately its profitability. The employees are perhaps the most important stakeholders to an organization as they make up the workforce and also deal with the customers. Satisfied employees have been noted to perform better which in turn translates more profitability 11 .
Apple also needs to ensure that it maintains a win-win relationship with its business associates to motivate them to make more sales which would in turn result to more revenue. Finally, since the decisions and operations of the company have an effect on the community, it is essential to ensure that they maintain a great working relationship so as to maintain a great corporate image. The image of any brand is very essential as it is what determines the appeal and demand of its products.
Controversial CSR
The biggest CSR issue that Apple has had to deal with is the harsh working conditions of Chinese laborers that work with the company’s suppliers. The individuals that are responsible for the assembly of its iPad and iPhone product lines have been found to work in very deplorable conditions. This is an issue that is bound to disappoint socially responsible consumers and investors and can adversely impact the company’s image and ultimately it profitability. The New York Times published an article highlighting the unsavory working conditions of one of Apple’s primary suppliers. These conditions included crowded living quarters, 24 hour long work shifts, horrible explosions and exposure to toxic chemicals. Additionally, an audit of most of its suppliers found them to be in direct violation of its Suppliers Code of Conduct and the fact that it has requested them to adhere to the code cannot be as effective as switching suppliers and this implies that the company condones this type of behavior 12 .
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