essay

Case Study #3

Apple Suppliers & Labor Practices

With its highly coveted line of consumer electronics, Apple has a cult following among loyal consumers.

During the 2014 holiday season, 74.5 million iPhones were sold. Demand like this meant that Apple was

in line to make over $52 billion in profits in 2015, the largest annual profit ever generated from a

company’s operations. Despite its consistent financial performance year over year, Apple’s robust profit

margin hides a more complicated set of business ethics. Similar to many products sold in the U.S., Apple

does not manufacture most its goods domestically. Most of the component sourcing and factory

production is done overseas in conditions that critics have argued are dangerous to workers and harmful

to the environment.

For example, tin is a major component in Apple’s products and much of it is sourced in Indonesia.

Although there are mines that source tin ethically, there are also many that do not. One study found

workers—many of them children—working in unsafe conditions, digging tin out by hand in mines prone

to landslides that could bury workers alive. About 70% of the tin used in electronic devices such as

smartphones and tablets comes from these more dangerous, small-scale mines. An investigation by the

BBC revealed how perilous these working conditions can be. In interviews with miners, a 12-yearold

working at the bottom of a 70-foot cliff of sand said: “I worry about landslides. The earth slipping from

up there to the bottom. It could happen.”

Apple defends its practices by saying it only has so much control over monitoring and regulating its

component sources. The company justifies its sourcing practices by saying that it is a complex process,

with tens of thousands of miners selling tin, many of them through middle-men. In a statement to the

BBC, Apple said “the simplest course of action would be for Apple to unilaterally refuse any tin from

Indonesian mines. That would be easy for us to do and would certainly shield us from criticism. But that

would also be the lazy and cowardly path, since it would do nothing to improve the situation. We have

chosen to stay engaged and attempt to drive changes on the ground.”

In an effort for greater transparency, Apple has released annual reports detailing their work with

suppliers and labor practices. While more recent investigations have shown some improvements to

suppliers’ working conditions, Apple continues to face criticism as consumer demand for iPhones and

other products continues to grow.

Essay directions –

Students will have to identify and analyze the above ethical dilemma. Write a 750 – 1000 word, double-

spaced paper, and APA style.

Students are expected to identify the key stakeholders, discussion of the implications of the ethical

dilemma, and answer the case study questions. Each paper should have the following sections: •

Introduction of the case• The ethical dilemma • Stakeholders • Questions • Conclusions • References

Questions:

1. Do you think Apple should be responsible for ethical lapses made by individuals further down its

supply chain? Why or why not?

 Modified Case study from McCombs School of Business, The University of Texas Austin

2. Should Apple continue to work with the suppliers in an effort to change practices, or should they stop

working with every supplier, even the conscientious ones, to make sure no “bad apples” are getting

through? Explain your reasoning.

3. Do you think consumers should be expected to take into account the ethical track record of

companies when making purchases? Why or why not?

4. Can you think of other products or brands that rely on ethically questionable business practices? Do

you think consumers are turned off by their track record or are they largely indifferent to it? Explain.

5. Would knowing that a product was produced under ethically questionable conditions affect your

decision to purchase it? Explain with examples.

6. If you were part of a third-party regulating body, how would you deal with ethically questionable

business practices of multinational corporations like Apple? Would you feel obligated to do something,

or do you think the solution rests with the companies themselves? Explain your reasoning.

Resources:

Apple ‘failing to protect Chinese factory workers’ http://www.bbc.com/news/business-30532463

How Apple could make a $53 billion profit this year

http://money.cnn.com/2015/07/17/technology/apple-earnings-2015/

Global Apple iPhone sales from 3rd quarter 2007 to 2nd quarter 2016 (in million units)

http://www.statista.com/statistics/263401/global-apple-iphone-sales-since-3rd-quarter-2007/

Despite successes, labor violations still haunt Apple

http://www.theverge.com/2015/2/12/8024895/apple-slave-labor-working-conditions-2015

Reports – Supplier Responsibility – Apple https://www.apple.com/supplier-responsibility/progress-

report/

Author: Lucy Atkinson, Ph.D. Stan Richards School of Advertising & Public Relations Moody College of

Communication The University of Texas at Austin

 Modified Case study from McCombs School of Business, The University of Texas Austin