Apple and Foxconn

In the past few years Apple and other electronics manufacturers have been in the news for alleged unethical practices carried out by some of their suppliers. The ethical issues were concerning the 2010 suicides in the Chinese Foxconn factories, which are the main suppliers for Apple, and the IPhone5 strikes that occurred in the beginning of October. All of these events were as a result of the workers’ poor living conditions, inadequate health care benefits and a load of overtime hours. Apple’s speedy response has been triggered by the growing global concern regarding Foxconn’s unethical practices towards its workers.

Apple has agreed to work along with Foxconn and the Fair Labor Association in order to ensure that its suppliers in China start carrying out more ethical practices such as hiring more workers, improving living standards, and providing more training. Following the 5 Step Process to Solve Ethical Problems would have helped the CEO of Apple solve the issues at Foxconn, right when they first occurred, back in 2010.

The process would help determine an appropriate action plan that is both ethical and beneficial for the stakeholders. It would help establish and encourage appropriate moral grounds throughout the company and it would also encourage the company to continue acting ethically, by regularly auditing its decisions. This decision would be beneficial because being ethical can make a company more favorable, in the eyes of the general public, when compared to its unethical competitors.

Foxconn Technology Group, a subsidy of the Hon Hai Precision Industries Ltd. is one of the world’s largest electronics manufacturers. It ranks 43rd among Global Fortune 500 Companies. It manufactures hardware for a prestigious list of clients, including Apple, Amazon, Microsoft, HP, Dell, Nokia and Nintendo. In 2010, a series of suicides at Chinese Foxconn factories garnered media coverage and exposed the unethical practices carried out by them. The suicides were sparked from poor, military-like treatment by supervising staff as well as long hours that workers were involuntarily forced to work.

On average Foxconn workers are said to work 174 regular hours per month and 80-100 hours overtime, while the legal limit for overtime in China is 36 hours, according to Global Compliance Workplace Network. Numerous workers reported inadequate health care benefits, substandard medical care on factory premises and poor living conditions inthe company’s living premises. All of these facts go against the fundamental rights, such as “just and favorable work conditions” and “fair working hours”, enlisted in the Universal Declaration of Human Rights, which deems Foxconn as highly unethical. All of these practices are cruel and unethical and if they were carried out by a company in a more developed country, the workers would look for a new job or even take a stand against the company.

Since China is still a developing country, however, with almost no enforced human rights, the workers are powerless. After the suicides, which most likely seemed like the only way out for some workers, Apple hastily promised that it would launch investigations. Nevertheless those were insufficient which caused another outburst in October 2012. On October 5, thousands of workers at a plant in China went on strike to protest their working conditions on Apple’s production lines. Employees at Foxconn’s plant in Zhengzhou, China, made the decision after management enacted impossibly strict standards for production of Apple’s new iPhone 5.

Public concern is escalating, due to harsh labor conditions in the overseas Foxconn factories that many U.S. gadget makers rely on to produce their devices. Apple is just one of many companies that outsource its manufacturing, but as the industry’s most popular and profitable company, it is under the most pressure to do something about it.

Since it became evident that the added up issues will no longer be overlooked, Apple finally decided that it was time for them to tackle the global criticism head-on and actually solve this ongoing problem. On their website, Apple states that when violations of their code are revealed, they will work together with suppliers that are willing to make changes and improve their facilities; otherwise the relationship will be terminated. On March 29,2012 Apple and Foxconn teamed up to solve working condition violations, clamp down on illegal overtime and upgrade worker housing and other amenities.

Foxconn agreed to improve safety and accident reporting and help workers enroll in social welfare programs that will ameliorate their lifestyle. It also stated that working hours will be reduced to 49 per week, including overtime. To compensate for the reduced hours, Foxconn will hire tens of thousands of additional workers. It also said that more housing and canteens will be built to accommodate the new workers. Due to the fact that Apple threatened Foxconn with terminating their contract, Foxconn had no other choice than to fix the sources of the problems and actually improve worker’s working and living conditions.

Not only did Apple confront Foxconn head on, but it joined the Fair Labor Association and requested they conduct a full-scale audit of its Chinese manufacturing, in response to the criticism it received. The new CEO of Apple, Tim Cook, seems to be ushering in a more open and transparent era, which will help earn the public’s trust and loyalty back.

Regardless of whether Apple is driving this change because it feels socially responsible for the individuals that have made its success possible or if it is doing so to help maintain customer loyalty and confidence in its products, this might set a precedent for the rest of the manufacturers and influence them to take the same sort of approach to ethical issues they may be experiencing with outsourcing cheap labor in different countries.

Apple’s CEO’s mentioned above plan is a one way of dealing with the already established problem, however a more effective plan would have constituted of the CEO using the 5-step Process to Solve Ethical Problems, back when first faced with the 2010 suicides in China. This would have provided a good guide when faced with such an ethical dilemma. Firstly, the company must identify which stakeholders a decision would affect and it what ways. For example, as soon as the suicides occurred, as a CEO acting ethically, one should have shifted all of their attention to the source of the problem and responded right away, not in order to hush up the problem but to actually truly try to solve it. Some of the causes for the suicides were poor working conditions and long overtime hours.

A solution to these problems would be providing training to staff and management on how to improve working conditions and hiring more staff so overtime issues do not occur . This would drastically improve the lifestyle of Foxconn workers, which is ultimately the most ethical solution in such a situation. Next, the CEO must establish moral intent and ensure that the employees understand that ethics is an important part of the company’s culture. Following this, the CEO must also give an example of ethical behavior and himself engage in it. For example, praising, and not punishing, whistle-blowing actions would encourage ethical behavior.

Lastly, the company must audit the decisions, and review them to make sure they are consistent with ethical principles. A great example of following this last step would be allowing the FLA to audit all suppliers of the company and regularly follow up with corrective action plans after violations of the company’s ethics code occur. The reason why the CEO of Apple might want to engage in such ethical behavior would be because mass media allows worldwide audiences to be instantly aware of events that occur. Thus acting ethically and making transparent, open to the public decisions will be in the company’s best interest to win over customer loyalty when their competitors are seen acting unethically.

In the past few years Apple and other electronics manufacturers have been in the news for alleged unethical practices carried out by some of their suppliers. In 2010, Foxconn Technology Group, one of Apple’s main suppliers, was brought to the attention of the public due to the 14 suicides that occurred in its Chinese factories. The suicides were as a result of working and living in horrible conditions, and being forced to work long overtime hours that were even sometimes unpaid. The lack of responsiveness from Apple and other manufacturers triggered the outburst in October 2012. Chinese workers were given impossibly strict standards for production of Apple’s new iPhone 5, which resulted in them forming strikes.

Although in response to the suicides in 2010 Apple’s approach seemed quite insufficient, the new CEO, Tim Cook, is taking much more drastic measures to solve this problem once and for all. Threatening Foxconn with terminating their relationship, Apple was able to influence Foxconn to hire new workers, improve working conditions and build ameliorated housing. Apple has also teamed up with the Fair Labor Association, who will conduct regular audits, to ensure that all of its suppliers are acting ethically. That is one effective way of dealing with the problem, however solving it as soon as it occurred, in 2010, would have prevented the strikes that are currently occurring.

Using the 5-step Process to Solve Ethical Problems gives appropriate guidance to a CEO faced with an ethical dilemma. Using it, the CEO is able to determine what is the appropriate response and whether or not it is ethical, how it will affect the stakeholders, how to establish moral intent as part of the company’s culture, and how to continue acting ethically after it has solved the problem. A company might want to engage in such ethical behavior in order to win over consumers and overpower competitors that are participating in unethical practices. Hopefully Foxconn adheres to its commitments because this might set the bar for the rest of the sector and help drive China to a more modernized and socially responsible state.

“Which side are you on? Lessons from the strikes at auto suppliers in South China”, [ 6 ]. “Workers in China strike over iPhone 5 labor demands”, [ 7 ]. “Corrective action”, [ 8 ]. “Apple, Foxconn revamp China work conditions”, [ 9 ]. Charles W. L. Hill/Thomas McKaig, Tim Richardson, Global Business Today, 3rd Canadian Edition (McGraw-Hill Ryerson Lmtd., 2012), 153. [ 10 ].

Charles W. L. Hill/Thomas McKaig, Tim Richardson, Global Business Today, 3rd Canadian Edition (McGraw-Hill Ryerson Lmtd., 2012), 154. [ 11 ]. Charles W. L. Hill/Thomas McKaig, Tim Richardson, Global Business Today, 3rd Canadian Edition (McGraw-Hill Ryerson Lmtd., 2012), 154. [ 12 ]. Charles W. L. Hill/Thomas McKaig, Tim Richardson, Global Business Today, 3rd Canadian Edition (McGraw-Hill Ryerson Lmtd., 2012), 155.