Social Performance of Organizations
Specify the nature, structure, and types of products or services of Apple, and identify two (2) key factors in the organization’s external environment that can affect its success.
Apple Inc. is an American technology company that was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. The company’s headquarter is in Cupertino, California, but has operations in both Americas, Europe, Asia, Middle East and Africa (Apple, 2016). The company specializes in the design and manufacture of mobile communication, digital content, media devices, personal computers, and related software and accessories. The company also designs and sells portable music players, networking solutions, and digital applications. Some of the products and services it sells include: iPhone, iPad, Apple Watch, Apple TV, Mac, operating systems and iPod (Apple, 2016). The company sells its digital content and services on Mac App Store, iTunes Store, App Store Apple Music and iBook Store. Apple’s products are sold and marketed across the world and can be found in online stores, Apple stores, wholesales and third party network carriers and resellers (Apple, 2016).
Apple gets some of its supplies from multiple sources, but some components can only be obtained from limited suppliers. The company also competes for these supplies with its competitors, and this implies that the availability of these components relies on demand, which is affected by price fluctuations as well shortages (Apple, 2016). One factor that could threaten the success of Apple is shortage of supply of raw materials used to assemble the company’s product. According to the company, any shortages in the raw materials used to manufacture and assemble products or product components like LCD screens could drive up the cost of production (Apple, 2016). This can in turn force the company to increase the prices of its products in order to cover the costs.
Another factor in the external environment that can potentially affect the success of Apple is changes in taxation. Any tax reforms that are intended to discourage imports and encourage exports could severely reduce the income and profits of Apple. According to an article by Pressman (2017), a Republican tax reform plan intends to reduce corporate taxes from 35% to 20%. This could save the company billions of dollars just from eased taxes. However, the same tax reforms plan intends to encourage domestic production by penalizing imports. If these reforms are implemented, Apple could potentially lose billions because it mainly outsources its supplies from Asia. Changes in taxation in the countries of suppliers could also drive up the manufacturing costs of apple. For instance, increased tax rate in China could increase the cost of raw materials for Apple’s products. This could ultimately increase the cost of production and reduce Apple’s income and profitability.
Suggest five (5) ways in which the primary stakeholders can influence the organization’s financial performance.
Apple’s primary stakeholders include its customers, suppliers, investors and employees. Each of these stakeholders can potentially affect the company’s financial performance as follows:
- Employees – as internal stakeholders, Apple’s employees directly influence the company’s design, manufacture, and sale of products. Employees control the human resource capabilities of the company, which is necessary in designing, innovating and developing the company’s top-selling products. This stakeholder group demands appropriate working conditions, compensation and career growth. Without satisfying these employee interests, Apple cannot be able to develop and sell its products and services. For instance, if the company fails to address its employees’ concerns and interests, employees might consider industrial action, and this could negatively affect the company’s income and profits (Khan, Alam & Alam, 2015).
- Suppliers – Apple relies on suppliers as external stakeholders for the supply of raw materials and components used in making and assembling iPhones, iPads, Apple TV, and other Apple products. The company should offer proper prices for the materials supplied. Failing to do so might lead to the supply of low quality materials or inadequate supply. Failure to supply or undersupplying these raw materials will increase the company’s production costs hence threatening the financial performance.
- Investors – As major stakeholders, apple’s investors put money into the company for the purpose of maximizing returns. To address the interests of this stakeholder group, Apple engages in profitable business practices that promote financial performance. This implies that the production and sale of Apple’s products should be profitable and the company has to maintain high profit margins. Investors can put money into the company to support the company’s operations, and this could enhance the company’s financial position. On the other hand, investors can choose to withdraw their investment from the company in case they feel like their money is at risk.
- Customers – These are the biggest stakeholder group for Apple as they are the ones who buy the company’s products and services. They include individual buyers, wholesale buyers and retail sellers of Apple’s products. Customers demand certain product features and quality that make the products efficient and reasonably priced. Most of the company’s products fetch premium market prices that match their high quality. At any point, customers can choose to purchase or stop purchasing the products. For instance, failure to maintain customer relationships and meeting quality demands could negatively influence Apple’s financial performance.
- Employees of suppliers – These are indirect stakeholders of Apple as they work for companies that supply Apple’s raw materials. Without these stakeholders, Apple’s suppliers cannot provide quality raw materials in a timely manner. The key interest of this stakeholder group is job security, good work conditions and proper compensation. Failure to honor these concerns could jeopardize the ability of these employees to produce raw materials that meet the required standards. For this reason, Apple introduced a Supplier Code of Conduct to monitor the employment practices of suppliers. According to the company, any supplier company that refuses to honor the code has its business relations with Apple terminated.
Specify one (1) controversial corporate social responsibility concern associated with Apple.
One controversial corporate responsibility of Apple is labor violations by the company’s suppliers. According to a report by China Labor Watch (CLW), Apple sources its raw materials from various factories in China (Cole & Chan, 2015). However, there have been reports of labor violations in terms of excess working hours, underpayment, failure to pay employees, lack of payment of medical cover, and forced and unpaid overtime. In addition, there have been reports of verbal abuse, workplace hazards and lack of labor protection of trainee workers and student workers.
In another report, Apples suppliers located in Suzhou, China, including Maintek Computer and, Cotek Electronics were reported to have employees working for 15 hours a day, and others were reported to work for 10 weeks without rest (Cole & Chan, 2015). As a result, these employees have complained of crippling fatigue and passing out due to extreme heat at their work stations. There have also been extreme cases where there are reports of lack of safety training and fire exits that have led to death and injuries among workers at these factories. All these labor practices are in violations of the Apple’s Code of Supplier Conduct as well as Chinese Labor Laws. Failure to address these concerns could ultimately affect the company’s financial performance and position as one of the most profitable company in the world.