Reference no: EM13940267

Assessment:

Capitalism and Organisational Ethics

Apple is the most valuable brand on the planet, making products that consumers love to buy. But how does this company treat its workers, when the world isn't looking? The BBC's Panorama program goes undercover inside the factory in China that makes the big-selling Apple iPhone 6. There we see the price paid by Chinese workers on the production line.

Apple has made a series of promises that are supposed to protect the workers in factories that supply products for the company. Those promises are comprehensive and involve guarantees about working conditions, even detailing minimum standards of accommodation for workers who have travelled hundreds of miles to work in these factories.

Under-cover cameras, though, show a very different picture. Employees are treated like they are prisoners. They are threatened and forced to sign work sheets that show them agreeing to long hours of overtime. Many fall asleep at the end of long shifts, making the work environment dangerous for themselves and others.

But it isn't just the factories that turn out the products that create questionable conditions for health and safety.

Reporter Richard Bilton goes to Indonesia to see the abysmal conditions of miners and their children working to gather tin used in electronic products. Landslides in the open cut mines are frequent and often lethal. Apple says it doesn't knowingly buy tin from illegal miners, but the people who make their living mining and smelting tin tell a quite different story. Is this powerful company making billions of dollars each year really doing all it can to protect the people who make its products and the materials that go into them? Or is their promise of being a good global corporate citizen a sham?

APPLE'S BROKEN PROMISES, reported by Richard Bilton and presented by Kerry
O'Brien - ABC Four Corners

Reading - 1

Apple on defence after BBC exposé of working conditions in its factories - Workers in Chinese factories work long hours, while children mine tin for Apple products Apple is in the spotlight again over working conditions for the people who make its products, following a BBC investigation that alleges poor treatment of workers in Chinese factories. Undercover filming by the BBC investigative program Panorama showed exhausted employees who said they had worked 12 to 16 hours a day with no days off for long stretches. They lived 12 to a room in dormitories and were forced to attend before and after work meetings without being paid for their time, the BBC said. The BBC program alleges Apple is not living up to its promise to customers to improve working conditions in China. Apple responded to the allegations with an internal memo in which Apple executive Jeff Williams and CEO Tim Cook said they were "deeply offended by the suggestion that Apple would break a promise to the workers in our supply chain."

Apple promised to improve conditions in its Chinese factories in 2010, after poor conditions were exposed following 14 suicides by workers at its Foxconn supplier in China. Apple published a set of standards at the time for treatment of its factory workers and shifted some of its production to another factory, Pegatron, outside of Shanghai. Long shifts, tired workers The BBC's investigation focused on the Pegatron employees, filming workers falling asleep while on their 12-hour shifts.

Panorama also investigated Apple's claim that its materials are ethically sourced. It found some of the tin in Apple's products came from illegal mines in Indonesia, where child labour was used to dig tin ore by hand in dangerous conditions. Apple denied that it has broken its promise to improve working conditions and source materials ethically. In the internal memo, Apple said the company regularly audits operations in China and has a team of experts there to ensure compliance with its supplier code of conduct. "Sometimes critics point to the discovery of problems as evidence that the process isn't working," the memo read.

Apple audit system:

"The reality is that we find violations in every audit we have ever performed, no matter how sophisticated the company we're auditing. We find problems, we drive improvement, and then we raise the bar." The memo said work weeks of more than 70 hours were common several years ago, but Apple now has a standard of less than 60 hours a week for its suppliers. The company claimed it is also addressing illegal tin mining by spearheading an Indonesian tin working group with other technology companies that holds smelters accountable for where tin is sourced and how it is mined.

Apple said it resents Panorama's suggestion that it is not living up to its promise to customers to improve working conditions.

"We know of no other company doing as much as Apple does to ensure fair and safe working conditions, to discover and investigate problems, to fix and follow through when issues arise, and to provide transparency into the operations of our suppliers," Apple said. Exposé unlikely to hurt sales Scott Stratten, a marketing expert and author of Unselling, said he doesn't believe Apple didn't know about the violations. The company makes its products overseas to keep prices down and knows the problems of operating in those markets, he told CBC News. But he doesn't think any tarnish created by reporting Apple's human rights record will hurt the company. "What's going to happen - people are going to get angry right now. Then Boxing Day will happen. Do you think anybody's going to care what happens to some poor worker overseas when they're trying to get $50 off a flat screen or an iPad?" Stratten said. "It's a sad commentary. I wish it mattered to people, I really do."

CBC's The Passionate Eye has the North American premiere of Apple's Broken Promises,
Sunday, January 18 at 10 p.m. ET/PT on CBC News Network.

Reading 2

Apple goes to war with the BBC - The Telegraph

Tim Cook is "deeply offended" by the BBC's allegations that Apple mistreats workers in its Chinese factories where the company's iPhones and iPads are assembled. The BBC's Panorama programme sent undercover reporters to Pegatron factories on the outskirts of Shanghai, where it claims to have uncovered poor treatment of workers and a breach of standards on workers' hours. In an email to around 5,000 staff across the UK, Apple senior vice president of operations Jeff Williams said both himself and the chief executive were "deeply offended by the suggestion that Apple would break a promise to the workers in our supply chain or mislead our customers in any way".

"Panorama's report implied that Apple isn't improving working conditions," he continued. "Let me tell you, nothing could be further from the truth." Williams claimed that Apple had shared "facts and perspective" on the company's commitments to human rights with the BBC in advance, but that they were "clearly missing from their programme.

The BBC report alleged that workers fell asleep during 12 hour shifts on the iPhone 6 production line and were made to work 18 days in a row after repeatedly being denied requests for a day off.

Williams countered that Apple has tracked the weekly hours of over one million workers within its supply chain, and that its suppliers have achieved an average of 93 per cent compliance with the 60-hour workweek limit this year.

"We can still do better. And we will."

Apple employs around 1,400 manufacturing workers in China, whom Williams said were "talented engineers and managers who are also compassionate people, trained to speak up when they see safety risks or mistreatment." "We know of no other company doing as much as Apple does to ensure fair and safe working conditions, to discover and investigate problems, to fix and follow through when issues arise, and to provide transparency into the operations of our suppliers," he said. Panorama also claimed to find children working in dangerous conditions on the Indonesian island of Bangka, where it said tin from illegal mines could be entering Apple's supply chain.

"Apple has publicly stated that tin from Indonesia ends up in our products, and some of that tin likely comes from illegal mines," Williams countered. "Tens of thousands of artisanal miners are selling tin through many middlemen to the smelters who supply to component suppliers who sell to the world. The government is not addressing the issue, and there is widespread corruption in the undeveloped supply chain. Our team visited the same parts of Indonesia visited by the BBC, and of course we are appalled by what's going on there.

"Apple has two choices: We could make sure all of our suppliers buy tin from smelters outside of Indonesia, which would probably be the easiest thing for us to do and would certainly shield us from criticism. But it would be the lazy and cowardly path, because it would do nothing to improve the situation for Indonesian workers or the environment since Apple consumes a tiny fraction of the tin mined there. We chose the second path, which is to stay engaged and try to drive a collective solution."

The company spearheaded the creation of an Indonesian Tin Working Group with other technology companies, and is seeking to implement a system to hold tin smelters accountable, he added. Williams, who has worked for the company since 1998, assured staff that Apple was taking the allegations seriously, and will investigate every claim made.

"We know there are a lot of issues out there, and our work is never done. We will not rest until every person in our supply chain is treated with the respect and dignity they deserve," he concluded.

Pegatron said they were carefully investigating the BBC's claims, and will take "all necessary actions".

Apple told the BBC they worked with suppliers to "prevent excessive overtime and that no other company is doing as much to ensure fair and safe working conditions".

Additional Material:

1. News.com -
https://www.news.com.au/technology/gadgets/shock-footage-bbc-panoramareport-shows-apple-workers-treated-like-prisoners/story-fn6vihic-1227245536479

2. Response from Apple -
https://www.abc.net.au/reslib/201503/r1394991_19864481.pdf

3. ABC Four Corners -
https://www.abc.net.au/4corners/stories/2015/03/02/4187424.htm

4. You Tube -
https://www.youtube.com/watch?v=kSvT02q4h40

Assessment tasks:

You are required to research the topic outlined above and fashion your responses to questions below by drawing from what we have learned in the subject. In particular, you must interpret the actions of various stake holders from the prism of the various theories of ethics and morality discussed in the unit.

You are encouraged to follow the progress of this ongoing debate as it unfolds in the media. Your responses must be to the questions listed below and will reflect your opinion and understanding of the issues involved shaped through research, analysis and debate.

Key Tasks/Questions:

1. Problem Identification and Situational Analysis:

2. Why are companies such as Apple so concerned about being seen to do the right thing? Is it due to an inherent corporate morality or self interest ?

Discuss the above in the context of:

• The importance of protecting "brand value" in a society where social media is increasingly powerful.
• Milton Friedman's doctrine on the goal of a firm
• The operation, in this instance, of the "Invisible Hand" - a metaphor as proposed by Adam Smith and others

3. What arguments can be made in Apple's defence