Challenges in global business

Introduction

Like many multinational corporations, Apple Inc manufactures many of its products primarily overseas, in places such as China, Taiwan, Singapore, the Philippines, and Thailand Compared to the United States. Even though many of these countries have labor laws in place, their laxity can rebound on the company in adverse ways.  For example, there were serious allegations of employee working conditions in at Foxconn, one of its Chinese manufacturers in the year 2006.  The allegations included longer working hours of 15-hours per day and overcrowded and ill- equipped residents for employees. After thorough investigations, the company found that the claims had merit. Accordingly, Apple Inc has made tremendous steps towards high standards of environmental responsibility, social responsibility, and ethical conduct. Apple’s suppliers are required to follow the guidelines and responsible practices whenever they make products or provide services for the company.

 Apple’s supplier code of conduct goes beyond mere compliance with the law by drawing upon internationally recognized standards to advance environmental and social responsibility. When differences arise between legal requirements and standards, the stricter standards are expected to apply in compliance with applicable law. Supplier’s compliance is assessed, and the violations may jeopardize business relationships to the extent of termination. In addition to maintaining standards, the company has regularly made changes in the past detailing its expectations for suppliers regarding health and safety, labor and human rights, ethics, environmental protection and management practices. This paper lists and explains various changes that the company has made to its Code of Conduct in recent years for suppliers providing goods or services to Apple Inc, or for use in or with Apple products. (Moren, 2010)

Environmental standards

Apple Inc has vigorously enforced its environmental standards across its supply chain. The company has implemented various programs such as Clean Water Program and EHS Academy. The clean water program promotes saving half a billion gallons of freshwater. The EHS Academy educates managers and suppliers to preserve diligently and protect the planet’s resources for future generations. Apple Inc conducted 451 audits of its suppliers in 2013. This accounted for more than 51% audits conducted in the year 2012.  The two specialized types of audits conducted were specialized environmental audits and process safety assessment. One of the Environmental practices that came under scrutiny in the audit report particularly focused on conflict minerals.  (Moren, 2014)

Apple Inc now requires all smelters of tantalum in its supply chain to be recognized as conflict-free by third-party auditors. Similar steps have been taken to suppliers of other minerals included in the manufacture of Apple products such as tungsten, tin, and gold.  Additionally, the Company released a list of refiners and smelters that it uses together with their verification status.  The goal of the stricter measures is to improve the accountability of its smelters and provide information for its stakeholders. (Moren, 2014)

The company’s measures have increased suppliers’ transparency and how they conduct business with the company. Apple Inc has in the past increasingly pushed suppliers to remove hazardous materials from products and afford more renewable energy for data centers in order to reduce the use of conflict minerals. For example, the company began investigating the potential associated environmental impacts and human rights of using certain minerals like tin, tantalum, tungsten and gold in 2009. In 2010, Apple Inc mapped its supply chains down to the level of refiners and smelters.  The Consumer Electronics Company has been instrumental in mapping its suppliers so as to exert its collective influence to build devices that meet environmental standards. (Moren, 2010)

Labor and human rights

Apple Inc continually strengthens suppliers’ code of conduct to help implement safer and more ethical working conditions. Apple Company looks at the code of conduct violation by conducting audits to improve working conditions. The company actively looks for issues and fixes them. For example, in 2014, 633 supplier audits were conducted in 19 countries as an activity in Supplier Responsibility initiative. Audits are conducted by Apple auditors and supported by various third-party auditors. The third parties auditors are experts in their fields and are trained to use detailed auditing protocols. Suppliers are graded on more than 100 data points during each audit corresponding to each category of the company’s Supplier Code of Conduct. (Apple, 2015)

The audits are conducted up and down its supply chain starting from component suppliers that produce hard drives, screens, cases, and other Mac components, as well as other products such as keyboards and displays and nonproduction suppliers, all the way up to final assembly manufacturers. Additionally, Apple Inc was the first electronics firm to engage directly with Indonesian smelters towards improving working conditions. To further push for solutions, the firm spearheaded the establishment of the Tin Working Group in the year 2013.  The company along other stakeholders held in-person meetings with more than 30 Indonesian tin traders and smelters and government officials and throughout 2013 and 2014 to establish a foundation and relationships to implement a possible system to enable the tracing of tin back to legal mines and testing out new land management practices. (Apple, 2015)

According to the annual reports, the company Apple Records supplier compliance with labor and human rights practices, environmental impact practices, ethics practices, health and safety practices, management commitment practices. It considers some problems as a core violation when they directly contradict Apple's Supplier Code of Conduct. Such violations include underage or involuntary labor, abuse, threats or intimidating practices against employees, falsified audit materials and serious environmental threats. Such facilities found directly violating the codes of conduct are placed on probation for a year pending further audits at the end of the period. Thus, every supplier conducting business with Apple is required to demonstrate the highest commitment to protecting employees’ rights. Such includes abiding by a maximum 60-hour workweek. In 2014 alone, 92% percent of all our suppliers were compliant. (Apple, 2015)

For example, in 2014, the most common violations found among suppliers concerned improper calculation of overtime, excessive working hours, deficient benefits, pay below minimum wages, discrimination, poor ergonomics, unsafe working conditions and negative environmental impact. Beyond the carrying out of audits, the company holds suppliers answerable with a periodical evaluation of Key Performance Indicators, which comprise measurements of injuries, training, and living conditions. The company makes procurement decisions in part on the basis in part on key indicators. (Apple, 2015)

The strict measures are taken as an oversight for the suppliers due to various incidents involving employees. Example, in 2009, reports on suicide by a Foxconn employee reportedly after losing a prototype of a new iPhone hit the headlines allegedly after being abused by Foxconn security personnel. It became clear that the company had to increase oversight as long as it is outsourcing products from countries that lack the same kinds of oversight as the United States. (Moren, 2014)

A Corrective Action Plan is required for every supplier in order to remediate all violations. The corrective action plan outlining a corrective course of action must be submitted within two weeks of the audit.  Severe violations adversely affect the suppliers’ business relationship with the company that may result in possible termination. The supplier is then monitored by a team of verification specialists who check in intervals ensure the supplier is on track. A delay in progress is escalated to senior management. (Moren, 2014)

Worker’s Protection

Apple Inc has also instituted changes to improve the ways its suppliers manage and recruit foreign workers. In particular, the company has required limiting of recruitment fees, which such employees are needed to pay to various labor agencies. Despite the fact that such fees are legal; the firm has set a ceiling on them equal to a month's net pay. In 2014, the firm helped 4500 foreign contract employees recoup US$3.96 million in excessive amounts paid to labor brokers.  The move is meant to control the practice. Another example is that of Apple Inc partnering with three firms as well as other groups such as trade unions and nongovernmental organizations to commence a pilot program that would improve the management of foreign contract workers working in Malaysian companies. The program also provides employees with education on relevant laws and their rights as well as cultural orientation and. According to the firm, such processes learned from that experience will be extended to the other suppliers. (Apple, 2015)

References

Moren, D. (2010). Apple cleans up its supply chain. Macworld, 27(5), 14-15.

Apple Inc (2015) Supplier Responsibility: 2015 progress report 

Moren, D. (2014) Apple's 2014 supplier report: Better working conditions 

Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in custom essay paper writing if you need a similar paper you can place your order from custom research paper services.